Question
Exhibit 9-1 Sporting Inc. is a distributor which sells one product for $100 per unit. Sporting pays $60 to buy the product. In addition, fixed
Exhibit 9-1 Sporting Inc. is a distributor which sells one product for $100 per unit. Sporting pays $60 to buy the product. In addition, fixed costs total $60,000 per month. Sporting wishes to maintain an inventory at the end of each month equal to 30% of the next month's projected sales. Purchases are paid in the month after purchase. Sporting makes all sales on credit and collects 40% in the month of sale and 60% in the month after sale. Budgeted monthly sales in units for the first five months of 2021 are as follows:
January | 10,000 units |
February | 15,000 units |
March | 18,000 units |
April | 20,000 units |
May | 16,000 units |
Refer to Exhibit 9-1. What will cash collections be in April?
Group of answer choices
$1,880,000
$2,060,000
$2,000,000
$1,920,000
None of the answer choices is correct.
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