Suppose That a Company Has the Following Accounts Receivable Collection $\quad$

question 158

Multiple Choice

Suppose that a company has the following accounts receivable collection pattern: Paid in the month of sale $\quad$$\quad$$\quad$$\quad$$30 \%$
Paid in the month following sale $\quad$$70 \%$ All sales are on credit.Suppose credit sales for March and April are $300,000 and $200,000,respectively.What would be the company's cash collection for April?

• A) $100,000
• B) $130,000
• C) $140,000
• D) $270,000

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Definitions:

Contribution Margin

The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and generate profit.

Sales Revenues

The total amount of money generated from sales of goods or services before any expenses are subtracted.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and packaging.

Scattergraph Method

A statistical tool used to plot data points on a graph to identify potential trends, often used in cost accounting to analyze variable costs against a level of activity.