Question
Cummings, a multi-million-dollar corporation, has been accumulating operating data in order to prepare annual profit plan. Details regarding Cummings sales for the first six months
Cummings, a multi-million-dollar corporation, has been accumulating operating data in order to prepare annual profit plan. Details regarding Cummings sales for the first six months of the year are as follows:
Estimated Monthly Sales | Type of Monthly Sales | |
January | $1,200,000 | Cash Sales 20% |
February | 1,300,000 | Credit Sales 80% |
March | 1,400,000 | |
April | 1,250,000 | |
May | 1,440,000 | |
June | 1,600,000 |
Collection pattern for credit sales Month of sales 30% One month following sale 40% Second month following sale 25% Cummings cost of goods sold average 40% of the sales value. Cummings objective is to maintain a target inventory equal to 30% of the next month's sales. Purchases of merchandise for resale are paid for in the month following the sale. The variable operating expenses (other than Cost of goods sold) for Cummings are 10% of sales and are paid for in the month following the sale. The annual fixed operating expenses are presented below. All of these are incurred uniformly throughout the year and paid monthly except for insurance and property taxes. Insurance is paid quarterly in January, April, July and October. Property taxes are paid twice a year in April and October: Annual Fixed Operating Costs
Advertising | $1,440,000 |
Depreciation | 840,000 |
Insurance | 360,000 |
Property taxes | 480,000 |
Salaries | 2,160,000 |
Determine Cummings total cash receipts for the month of April.
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