Question

Zhang Industries sells a product for $900. Unit sales for May were 600 and each month's sales are expected to exceed the prior month's results by 3%. Zhang pays a sales manager a monthly salary of $2,000 and a commission of 2% of sales in dollars. Assume 20% of Zhang's sales are for cash. The remaining 80% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.

a. $432,000.

b. $545,280.

c. $543,240.

d. $444,960.

e. $540,000.

Answer 1

Given the sales for the month of may is 600 units.

Each month sales are expected to increase the prior months result by 3% i.e, sales for june month = 618 units.

given the 20% of the sales are for cash and 80% are for credit. and these customers pay in the month following the sale.

cash sale during the month of june = 618 units * $900 * 20% = 111240$.

credit sales during the month of may = 600 units * $900 * 80% = 432000$.

Total budgeted cash receipts for the month of june = 543240$.

answer . c