Center Company Makes Collections on Sales According to the Following

question 106

Multiple Choice

Center Company makes collections on sales according to the following schedule:
$\begin{array}{|llcc|}\hline \text { \(30 \%\) in the month of sale}\\\hline \text { \(60 \%\) in the month following sale}\\\hline \text { \(8 \%\) in the second month following sale}\\\hline\end{array}$
The following sales are expected:
$$\begin{array} { | l | r | } \hline & \text { Expected Sales } \\\hline \text { January } & \$ 100,000 \\\hline \text { February } & \$ 120,000 \\\hline \text { March } & \$ 110,000 \\\hline\end{array}$$ Cash collections in March should be budgeted to be:

• A) $110,000.
• B) $110,800.
• C) $105,000.
• D) $113,000.

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Definitions:

Marginal Productivity Theory

A principle in economics that suggests the payment to a factor of production (like labor or capital) corresponds to its marginal productivity, which is the additional output generated by one more unit of that factor.

Income Distribution

The way in which total income is shared among individuals or groups within a society.

Perfect Competition

A market structure characterized by a large number of small firms, identical products sold by all firms, freedom of entry and exit, and perfect information about prices and products.

P = MC

The condition where the price of a good equals its marginal cost, representing an equilibrium in perfect competition markets.