Zhang Industries Sells a Product for $700

question 144

Multiple Choice

Zhang Industries sells a product for $700. Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%.
- Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars. Assume 30% of Zhang's sales are for cash. The remaining 70% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.

• A) $196,000.
• B) $280,000.
• C) $201,880.
• D) $285,880.
• E) $282,520.

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Definitions:

Fixed Costs

Costs that remain constant in total regardless of changes in the level of activity or volume of production.

Property Taxes

Taxes assessed on real estate by the government, based on the property's value, and used to fund public services.

Relevant Range

The range of activity within which the assumptions about variable and fixed costs in a cost model are valid.

GAAP

Generally Accepted Accounting Principles, a collection of commonly-followed accounting rules and standards for financial reporting.