Sales forecast for the first six months

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TechCo is retail distributor for MZB-33 computer hardware units. Sales forecast for the first six months of 2014 are as follows:

 

Units

Dollars

January

130

390,000

February

120

360,000

March

110

330,000

April

90

270,000

May

100

300,000

June

125

375,000

Total

675

2,025,000

Total sales consist of 25% cash sales, 30% credit cards sales and 45% sales on account. The cash sales and cash from credit cards sales are received in the month of sale. Credit and sales are subject to a 4% discount. The cash receipts for sales on account are 70% in the month following the sale and 28% in the second month after the sale. The remaining 2% are estimated to be uncollectable.

TechCo's month end inventory requirement for computer hardware units 30% of the next month's sales. The purchase price is $1800 per unit. Approximately 60% of the purchases in a month are paid in that month and the rest paid in the following month.

Selling and administration expenses ae equal to 10% of the current month's sales, including $2000 of depreciation. These are paid as incurred.

Reference no: EM13849510

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