A Company Has Forecast Sales in the First 3 Months

question 2

Multiple Choice

A company has forecast sales in the first 3 months of the year as follows (figures in millions) : January, $90; February, $20; March, $30. 70% of sales are usually paid for in the month that they take place and 30% in the following month. Receivables at the end of December were $20 million. What are the forecasted collections on accounts receivable in March?

• A) $27 million
• B) $50 million
• C) $23 million
• D) $35 million

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Definitions:

Comparative Advantage

A principle stating that if a country produces a good at a lower opportunity cost than another, it has a comparative advantage.

Opportunity Costs

The expense incurred from not selecting the subsequent preferable choice when a decision is made.

Comparative Advantage

The ability of a country or entity to produce a good or service at a lower opportunity cost than others, enabling trade benefits.

Production

A process that transforms resources into goods and services.