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1. Projected sales for December of 20xO are $360,000. Credit sales typically are 75 percent of total sales Intercoastal's credit experience indicates that 10 percent
1. Projected sales for December of 20xO are $360,000. Credit sales typically are 75 percent of total sales Intercoastal's credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month 2. Intercoastal's cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 40 percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold. 3. Hanson has estimated that Intercoastal's other monthly expenses will be as follows: Sales salaries Advertising and promotion Administrative salaries 20,000 Depreciation Interest on bonds Property taxes $20,000 16,000 25,000 1,000 900 In addition, sales commissions run at the rate of 1 percent of sales. . Intercoastal's president, Davies-Lowry, has indicated that the firm should invest $110,000 in an automated 1. Projected sales for December of 20xO are $360,000. Credit sales typically are 75 percent of total sales Intercoastal's credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month 2. Intercoastal's cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 40 percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold. 3. Hanson has estimated that Intercoastal's other monthly expenses will be as follows: Sales salaries Advertising and promotion Administrative salaries 20,000 Depreciation Interest on bonds Property taxes $20,000 16,000 25,000 1,000 900 In addition, sales commissions run at the rate of 1 percent of sales. . Intercoastal's president, Davies-Lowry, has indicated that the firm should invest $110,000 in an automated
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