Home Corporation Will Open a New Store on January 1

question 75

Multiple Choice

Home Corporation will open a new store on January 1. Based on experience from its other retail outlets, Home Corporation is making the following sales projections: Home Corporation estimates that 70% of the credit sales will be collected in the month following the month of sale, with the balance collected in the second month following the month of sale. In a cash budget for April, the total cash receipts will be:

• A)$74,000
• B)$57,000
• C)$114,000
• D)$97,000

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Definitions:

Bins

Containers or designated spaces used for storing inventory items in a structured manner.

Operating Leverage

A financial metric that measures the degree to which a firm or project can increase operating income by increasing revenue.

Variable Costs

Expenses that fluctuate based on the amount of output or the level of activity in a business.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, highlighting the fixed versus variable costs of a business.