Fenway Company has budgeted the following amounts for sales in 2002: Month Sales April $98,000 May 67,000 June 108,000 July 82,000 An analysis of past patterns of receipts shows that 60% of the sales dollars are received in the month of the sale and 40% are received in the following month. Assuming this pattern continues, the amount of cash to be received in May and June is A. $85,600 and $83,400, respectively. B. $97,600 and $97,600, respectively. C. $91,600 and $81,600, respectively. D. $79,400 and $91,600, respectively.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Fenway Company has budgeted the following amounts for sales in 2002:
Month Sales
April $98,000
May 67,000
June 108,000
July 82,000
An analysis of past patterns of receipts shows that 60% of the sales dollars are received in the month of the sale and 40% are received in the following month.
Assuming this pattern continues, the amount of cash to be received in May and June is
A. $85,600 and $83,400, respectively.
B. $97,600 and $97,600, respectively.
C. $91,600 and $81,600, respectively.
D. $79,400 and $91,600, respectively.
CAPITAL BUDGETING
1. Using an interest rate of 8%, what is the present value of $50,000 to be received 4 years
from today?
A. $36,750.00
B. $27,015.00
C. $68,027.21
D. $19,963.50
2. What is the present value of $650,000 that will be received in 10 years, if the discount
rate is 12% ?
A. $367,263
B. $209,300
C. $250,575
D. $166,855
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