The local ACE hardware store expects to have 40,000 sales transactions in November, amounting to $700,000 in sales revenue. The store expects that 80% of the sales transactions will be made using credit or debit cards, regardless of the size of the purchase, while the remaining 20% will be paid with cash. Although customers use credit cards and debit cards with differing transactions fees, the average fee charged to the store amounts to $0.30 per transaction plus 2% of the amount charged. 1) What kind of cost behavior is this? Could you write a cost equation for it? 2) How many sales transactions does ACE expect will be paid by customers using credit or debit cards? 3) How much of November's sales revenue is expected to be paid for by customers using credit or debit cards? 4) When budgeting for November's operating expenses, how much should ACE anticipate for credit and debit card transaction fees? 5) Assuming the credit and debit card companies process the deposit the same day as the transaction, how much should ACE budget for cash collections in November from credit and debit card sales? 6) How much should ACE budget for cash collections in total for the month of November?
The local ACE hardware store expects to have 40,000 sales transactions in November, amounting to $700,000 in sales revenue. The store expects that 80% of the sales transactions will be made using credit or debit cards, regardless of the size of the purchase, while the remaining 20% will be paid with cash. Although customers use credit cards and debit cards with differing transactions fees, the average fee charged to the store amounts to $0.30 per transaction plus 2% of the amount charged. 1) What kind of cost behavior is this? Could you write a cost equation for it? 2) How many sales transactions does ACE expect will be paid by customers using credit or debit cards? 3) How much of November's sales revenue is expected to be paid for by customers using credit or debit cards? 4) When budgeting for November's operating expenses, how much should ACE anticipate for credit and debit card transaction fees? 5) Assuming the credit and debit card companies process the deposit the same day as the transaction, how much should ACE budget for cash collections in November from credit and debit card sales? 6) How much should ACE budget for cash collections in total for the month of November?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:The local ACE hardware store expects to have 40,000 sales transactions in November,
amounting to $700,000 in sales revenue. The store expects that 80% of the sales transactions will
be made using credit or debit cards, regardless of the size of the purchase, while the remaining
20% will be paid with cash. Although customers use credit cards and debit cards with differing
transactions fees, the average fee charged to the store amounts to $0.30 per transaction plus 2%
of the amount charged.
1) What kind of cost behavior is this? Could you write a cost equation for it?
2) How many sales transactions does ACE expect will be paid by customers using credit or
debit cards?
3) How much of November's sales revenue is expected to be paid for by customers using
credit or debit cards?
4) When budgeting for November's operating expenses, how much should ACE anticipate
for credit and debit card transaction fees?
5) Assuming the credit and debit card companies process the deposit the same day as the
transaction, how much should ACE budget for cash collections in November from credit
and debit card sales?
6) How much should ACE budget for cash collections in total for the month of November?
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