Information Pertaining to Yekstop Corp

question 49

Multiple Choice

Information pertaining to Yekstop Corp.'s sales revenue is presented below:Management estimates that 4% of credit sales are eventually uncollectible. Of the collectible credit sales, 65% are likely to be collected in the month of sale and the remainder in the month following the month of sale. The company desires to begin each month with an inventory equal to 75% of the sales projected for the month. All purchases of inventory are on open account; 30% will be paid in the month of purchase, and the remainder paid in the month following the month of purchase. Purchase costs are approximately 60% of the selling prices.

Total budgeted cash collections for Yekstop Corp. in December are:

• A) $556,512.
• B) $375,216.
• C) $495,080.
• D) $502,568.
• E) $506,780.

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Definitions:

True Probabilities

The actual likelihood of an event occurring, as opposed to estimated probabilities based on theoretical models or assumptions.

Information Processing

The process of gathering, storing, and manipulating data to produce meaningful information.

Fully Rational

Describes an economic theory assumption that individuals always make decisions that provide them with the highest amount of personal satisfaction or utility, based on full knowledge and a consistent evaluation of available information.

Behavioral Biases

Psychological tendencies that cause individuals to act in predictably irrational ways, often impacting financial and investment decisions.