Michael Corporation Has the Following Sales Forecasts for the First

question 85

Multiple Choice

Michael Corporation has the following sales forecasts for the first three months of 2006: Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month.
What is the cash balance at the end of January, assuming that cash is received only from customers and that $48,000 is paid out during January?

• A) $19,400
• B) $23,400
• C) $20,600
• D) $21,000

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Definitions:

Activity Level

A measure of the amount of work or operations conducted by a business or organization during a specific period.

Activity Index

A measure used to understand the level of activity in a particular area, such as production or sales, often used in planning and forecasting.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and generate profit.

Target Net Income

The specific amount of net income that a company aims to achieve within a certain period.