Carver Lumber Sells Lumber and General Building Supplies to Building

question 60

Multiple Choice

Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow:Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January.Collections are expected to be 90% in the month of sale and 10% in the month following the sale.The cost of goods sold is 75% of sales.The company desires to have an ending merchandise inventory equal to 60% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.Other monthly expenses to be paid in cash are $24,700.Monthly depreciation is $16,000.Ignore taxes. The net income for December would be:

• A) $39,300
• B) $42,300
• C) $32,900
• D) $55,300

---

Definitions:

Total Sales Revenue

The entire amount of income generated by the sale of goods or services related to the company's primary operations.

Formal Decision-making Process

A structured approach to decision-making that involves systematic steps such as identifying a problem, generating alternatives, evaluating alternatives, and making a decision.

Stage-Gate®process

A project management approach that divides the process of bringing a new product to market into distinct stages separated by decision-making checkpoints or "gates."

Cross-functional Team

A group comprised of members from different functional areas of an organization, working together towards a common goal.