Question

Genesis, Inc. expects sales of $3,700, $4,200, $4,600, and $5,000 for the months of March through June, respectively. The company collects 50 percent of sales in the month of sale, 30 percent in the month following the month of sale, and 17 percent in the second month following the month of sale. The remaining 3 percent of sales is never collected. How much money does the company expect to collect in the month of July? $4,594.00 $4,800.00 $5,000.00 $7,300.00 $4,286.00

Answer 1

Using 3 months moving average method to predict sales in month of July ,

Moving average = ($4,200-$3,700)+ ( $4,600- $4,200)+ ($5,000-$4,600) / 3 = $ 433.33

	March	April	May	June	July
Sales	$3,700	$4,200	$4,600	$5,000	$5,433.33
Collection
50% of current month					$2,716.67	50%*5433.33
30% of following month					$1,500	30%*5000
17% of second month					$782	17%*4600
				total collection	$4,999	2716.67+500+782

OPTION B : $ 5,000