A Company Has Forecast Sales in the First Three Months

question 20

Multiple Choice

A company has forecast sales in the first three months of the year as follows (figures in millions) : January,$80; February,$60; March,$40.70% of sales are usually paid for in the month that they take place,20% in the following month,and the final 10% in the month after that.Receivables at the end of December were $23 million.What are the forecasted collections on accounts receivable in March?

• A)$180 million
• B)$13 million
• C)$40 million
• D)$48 million

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Definitions:

Willingness to Pay

The maximum amount an individual or entity is willing to pay for a good or service, reflecting its perceived value.

Marginal Utility

The additional satisfaction or benefit gained from consuming one more unit of a good or service.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing their gained benefit.

Market Price

The current price at which a commodity, security, or service can be bought or sold in a particular market.