Leak Company Sells Only on Credit Customer Amounts on Account Are Collected 45% in the Month

question 54

Multiple Choice

Leak Company sells only on credit.It reported the following information for 2016: $$\begin{array} { l l l l l } & \underline { \text { September } } & \underline { \text { October } } & \underline { \text { November } } & \underline { \text { December } } \\\text { Budgeted sales } &\$900,000&\$800,000&\$850,000&\$960,000\end{array}$$ Customer amounts on account are collected 45% in the month of sale and 55% in the following month.How much is the November 30, 2016 budgeted Accounts Receivable?

• A)$467,500
• B)$382,500
• C)$827,500
• D)$528,000

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Definitions:

Break-even Point

The point at which total costs equal total revenue, meaning no profit or loss is generated.

Manufacturing Margin

The difference between the cost of manufacturing the product and the price it is sold for, indicating the profitability of production.

Variable Cost

Costs that change in proportion to the level of activity or volume of production in a company.

Absorption Costing

The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.