Question

34. Crane Company expects August sales to be $50,000. Of these sales, credit sales are expected to be $15,000. Collection of credit sales are 60% in the month of sale, 30% in the month following sale and 5% two months following sale. The remaining 5% is uncollectable. ________ is the expected cash collection in October from August sales.

A) $750  

B) $1,500

C) $3,500

D) $4,400

38. Budgets that focus on the budgeted cost of activities required to produce and sell products are called ________.

A) strategic budgets

B) master budgets

C) activity-based budgets

D) rolling budgets

Please show work, thank you.

Answer 1

37) Cash collection in the month of October

Answer is A

Particulars	Sales	August	September	October
Cash sales	$ 35,000	$ 35,000
Credit sales	$ 15,000	$    9,000 (15000x60%)	$        4,500 (15000x30%)	$      750 (15000x5%)
Total	$ 50,000	$ 44,000	$        4,500	$      750

Cash collected from August sales in October is $750

38)

Answer is C

Activity-based budgets

Activity-based budgets are prepared based on activity level and not at the function level.

These budgets are prepared based costs incurred for each activity level.