History Entertainment Distributes a DVD That Sells for $12 Per

question 35

Multiple Choice

History Entertainment distributes a DVD that sells for $12 per unit.History pays $7 per unit to buy the product.Selling cost of $1 per unit is incurred to deliver the product to the customer.This is paid in cash when the product is sold.History has $50,000 per month in fixed selling and administrative expenses (including $3,000 in depreciation) , which are paid half in the month incurred and half in the next month.It is History's policy to maintain an inventory at the end of each month equal to 30% of the next month's projected cost of sales.History makes 30% of sales in cash, and the rest are on credit.Credit sales are collected in the month after sale.Budgeted monthly sales for the first five months of 2017 are as follows: $$\begin{array} { l l } \text { January } & 20,000 \text { units } \\\text { February } & 22,000 \text { units } \\\text { March } & 26,000 \text { units } \\\text { April } & 28,000 \text { units } \\\text { May } & 40,000 \text { units }\end{array}$$ How much is the budgeted cash payment for selling and administrative expenses in April?

• A)$78,000
• B)$81,000
• C)$75,000
• D)$50,000

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Definitions:

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome.

Personal Selling

A direct marketing approach where salespeople personally communicate with potential buyers to promote and sell products or services.

Salesperson

An individual who sells goods and services to other entities, usually in exchange for money.

Credit And Debit Cards

are financial tools used for electronic transactions; credit cards allow borrowing against a line of credit, while debit cards withdraw funds directly from a bank account.