Question

The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and July are 7,100 units, 10,100 units, 13,300 units, and 14,000 units, respectively. 20% of sales are cash sales; 80% of sales are credit sales. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. Required: Calculate the budgeted cash received from customers for the month of May

Answer 1

$1,140,636

Step-by-step explanation:

April budgeted sales revenue = 7,100 × $111 = $788,100

April budgeted sales revenue cash collected in May = ($788,100 × 80%) × 60% = $378,288

May budgeted sales revenue = 10,100 × $111 = $1,121,100

May budgeted sales revenue cash collected in May = ($1,121,100 × 20%) + [($1,121,100 × 80%) × 40%] = $224,220 + 538,128 = $762,348

Budgeted cash received for May = $378,288 + $762,348 = $1,140,636

Therefore, the budgeted cash received from customers for the month of May is $1,140,636.