The Following Sales Budget Has Been Prepared Collections Are 50% in the Month of Sale, 40% in }

question 109

Multiple Choice

The following sales budget has been prepared: $\begin{array}{lrr}\text { Month } & \text { Cash Sales } & \text { Credit Sales }\\\text { September } & \$ 167,000 & \$ 123,000 \\\text { October } & 225,000 & 180,000 \\\text { November } & 330,000 & 210,000 \\\text { December } & 135,000 & 190,000\end{array}$ Collections are 50% in the month of sale, 40% in the month following the sale, and 10% two months following the sale.No uncollectible accounts are anticipated._____ is the estimated cash collection in December.

• A)$325,000
• B)$197,000
• C)$135,000
• D)$332,000

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Definitions:

Cost Behavior

The way in which a cost reacts to changes in the level of activity.

Curvilinear

Describes a graph or relationship that displays a curve, illustrating that changes between two variables are not constant but vary at different rates.

Fixed Cost

A cost that does not change with the level of production or sales, remaining constant regardless of activity.

Fixed Production Costs

Expenses that do not fluctuate with the level of production output, such as depreciation on factory buildings and salaries of certain managers.