A Company Has Forecast Sales in the First Three Months

question 20

Multiple Choice

A company has forecast sales in the first three months of the year as follows (figures in millions) : January, $80; February, $60; March, $40. 70 percent of sales are usually paid for in the month that they take place, 20 percent in the following month, and the final 10 percent in the month after that. Receivables at the end of December were $23 million. What are the forecasted collections on accounts receivable in March?

• A)$180 million
• B)$13 million
• C)$40 million
• D)$48 million

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Definitions:

Output

The total quantity of goods or services produced by an individual, firm, or country over a specified period.

Government Deregulation

The process of reducing or eliminating government rules controlling how businesses can operate, often to encourage more competition and innovation.

Economies of Scale

Enterprises gain cost benefits from their scale of operation, which typically results in the cost per unit of output decreasing as the scale increases.

Economic Profit

The total revenue of a business minus its explicit and implicit costs.