Marker Products Inc Sells All of Its Products on Credit

question 22

Essay

Marker Products Inc sells all of its products on credit.The company expects to collect 65 percent of sales in the quarter of sale and 35 percent the quarter following the sale.Accounts receivable at the end of last year totaled $3 million,all of which will be collected in the first quarter of the coming year.Marker's sales budget shows the following projected sales revenues:
$$\begin{array} { r r } \text { Quarter 1: } & \$ 8,800,000 \\\text { Quarter 2: } & \$ 11,000,000 \\\text { Quarter 3: } & \$ 11,440,000 \\\text { Quarter 4: } & \$ 10,560,000\end{array}$$
Prepare a budget for cash collections from sales for each of the four quarters.

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Definitions:

AVC

Average Variable Cost refers to the sum of all variable expenses incurred when producing an item, divided by the number of units produced.

ATC

Average Total Cost is determined by dividing the overall cost by the output quantity produced.

MC

Short for Marginal Costs, representing the additional cost incurred in producing one additional unit of a good or service.

AVC

Average Variable Cost, which is the total variable costs of production divided by the quantity of output produced.