Zhang Industries sells a product for $700.Unit sales for May were 400 and each month's sales are expected to grow by 3%.Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars.Assume 30% of Zhang's sales are for cash.The remaining 70% are credit sales; these customers pay in the month following the sale.Compute the budgeted cash receipts for June.
A)$282,520.
B)$196,000.
C)$201,880.
D)$280,000.
E)$285,880.

Question

Quizplus · Accepted Answer

The budgeted cash receipts for June include 30% of June's sales and 70% of May's sales. June's sales are 400 units * 1.03 * $700 = $288,400. Cash receipts from June's sales are 30% of $288,400 = $86,520. Cash receipts from May's credit sales are 70% of 400 units * $700 = $196,000. Total cash receipts for June are $86,520 + $196,000 = $282,520.

Zhang Industries Sells a Product for $700