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The following information is available: (i) The selling price per unit is f9 It will increase to UND9.50 per unit from April and in subsequent month: 25% of budgeted sales revenue is expected to be received in the month of sale. 70% of budgeted sales in the following month , while 5% of budgeted sales are expected to result in bad debts. (ii) The budgeted number of units in inventory at the end of each month is equal to the budgeted sales for the following month. (iii) The business is seasonal, and, as indicated in the above budget.results in April are expected to be similar to those in January. There is a three-month cycle, so the results in May and June are expected to be similar to those in February and March respectively. Select the correct answer from the drop down list. What is the total amount of cash collected in the month of March? £95,600 £97,500 £78,500 £96,300

Question

The following information is available:
(i) The selling price per unit is f9 It will increase to
UND9.50
per unit from April and in subsequent month: 25% 
of budgeted sales revenue is expected to be received in the month of sale.
70%  of budgeted sales in the following month , while 5% 
of budgeted sales are expected to result in bad debts.
(ii) The budgeted number of units in inventory at the end of each month is equal to the budgeted sales
for the following month.
(iii) The business is seasonal, and, as indicated in the above budget.results in April are expected to be
similar to those in January. There is a three-month cycle, so the results in May and June are expected to
be similar to those in February and March respectively.
Select the correct answer from the drop down list.
What is the total amount of cash collected in the month of March?
£95,600
£97,500
£78,500
£96,300

The following information is available: (i) The selling price per unit is f9 It will increase to UND9.50 per unit from April and in subsequent month: 25% of budgeted sales revenue is expected to be received in the month of sale. 70% of budgeted sales in the following month , while 5% of budgeted sales are expected to result in bad debts. (ii) The budgeted number of units in inventory at the end of each month is equal to the budgeted sales for the following month. (iii) The business is seasonal, and, as indicated in the above budget.results in April are expected to be similar to those in January. There is a three-month cycle, so the results in May and June are expected to be similar to those in February and March respectively. Select the correct answer from the drop down list. What is the total amount of cash collected in the month of March? £95,600 £97,500 £78,500 £96,300

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LaurieProfessional · Tutor for 6 years

Answer

£96,300.00

Explain

## Step1:<br />In March, the cash received will consist of three parts: the sales revenue of this month, that of the last month (February), and the month before last (January).<br /><br />## Step2:<br />Based on the information given in the problem, we collect 25% of budgeted sales revenue of March in March, 70% of the February's budgeted sales revenue, and the remaining 5% will result in bad debts. <br /><br />## Step3:<br />We need to calculate each part individually and then add up these three parts:<br /><br />### This Month (March): <br />The units sold in March are 12,000 with the price per unit being £9. So, the total sales will be \( 12,000 * £9 = £108,000 \).<br />Then calculate the 25% of sales at the end to get the part collected within the month, which is \( £108,000 * 25 \% \).<br /><br />### Last Month (February): <br />The units sold in February were 11,000 at an unit price of £9. So, the total sales in February was \( 11,000 * £9 = £99,000 \).<br />Then, 70% of this total will be collected this month, which is \( £99,000 * 70 \% \).<br /><br />### Month Before Last (January): <br />The units sold in January were 10,000 at an unit price of £9. So, the total sales in January was \( 10,000 * £9 = £90,000 \).<br />From those sales 5% will still be collected in March, which is \( £90,000 * 5 \% \).<br /><br />## Step4:<br />Then, combine those three parts, and it gives us the total cash collected in March.
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