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How much cash is budgeted to be collected in June

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Question - Oilero Inc. sells essential oils for burners. They have the following yearly estimates that apply to 2021. They estimate to sell 22,000 units each month.

The sales price for one unit of essential oils is $4.50. The company will run the following promotions:

All purchases in May: 30% off per unit

All purchases in July: 20% off per unit

All purchases in August: $0.50 off per unit

Cash collection for purchases each month is split in the following way:

10% in cash in the current month

40% on account and paid in cash within the same month

30% on account and paid in cash the following month

20% prepaid in cash in the prior month

Important assumption: Assume that customers know about the promotions ahead of time and that future discounts are applied to prepaid purchases. For example, a customer prepaying in July for a purchase that will be picked up in August will pay $4 per unit ($4.50 - $0.50, due to the August discount).

Required - How much cash is budgeted to be collected in June 2021?

Reference no: EM132559056

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