Maxim Fasteners Distributes Giant Binder Clips That Sell for $3

question 14

Multiple Choice

Maxim Fasteners distributes giant binder clips that sell for $3 each.Maxim pays $1.20 each to buy the clips.The company has $4,000 per month in fixed costs.Policies and other information follow:
-Inventory is maintained at the end of each month equal to 10% of the next month's projected sales in units.
-Purchases are paid 40% in the month acquired and the balance in the month after.
-All sales are on credit, and 30% are collect in the month of sale and 70% in the month after sale.
-Budgeted monthly sales in units for the first five months of 2017 are as follows:
$$\begin{array} { l l l } \text { - January } & 6,000 \text { units } \\\text { - February } & 5,000 \text { units } \\\text { - March } & 7,000 \text { units } \\\text { - April } & 9,000 \text { units } \\\text { - May } & 8,000 \text { units }\end{array}$$
Variable selling and administrative costs are $0.50 per clip and are paid in the month of incurred.
What amount will be reported for budgeted Accounts Receivable at the end of April?

• A)$8,100
• B)$25,200
• C)$6,300
• D)$18,900

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Definitions:

Grains

Seeds of grasses cultivated for food, a staple in many diets around the world, such as wheat, rice, and corn.

Vegetables

Various plant parts consumed by humans as food including leaves, roots, flowers, seeds, and stalks.

Fruits

The seed-bearing structures of flowering plants that are often sweet or sour and consumed as food.

Olive Oil

A healthy fat obtained from olives, known for its heart-healthy monounsaturated fats and antioxidants.