- 1 Marks
Question
MNO is a retailer of various domestic goods, selling all purchases in the same month, therefore not keeping any stock. The company’s policy is to sell at a margin of 9.091% and collection of sales proceeds is 50% in the month of sales, 30% the month after, and the balance in the 3rd month. Purchases for the past four months are as follows:
| Month | Amount (N) |
|---|---|
| 1 | 65,000,000 |
| 2 | 72,000,000 |
| 3 | 60,000,000 |
| 4 | 80,000,000 |
What is the sales collection in Month 4?
A. N64,000,000
B. N70,400,000
C. N72,000,000
D. N78,793,459
E. N79,200,000
Answer
E. N79,200,000
Explanation:
The correct answer is option E, “N79,200,000.”
Explanation: Sales are calculated using the margin on purchases and collections as per company policy. The sales collection for Month 4 includes 50% of Month 4 sales, 30% of Month 3 sales, and 20% of Month 2 sales.
- Tags: Cash Budgeting, Revenue management, Sales Collection
- Level: Level 1
- Topic: Budgeting
- Series: MAR/JULY 2020
- Uploader: Theophilus