Reference no: EM132529157
Custom Embroidering, Inc. (CEI) manufactures baseball hats with the Arizona State University Sun Devil logo embroidered on the hats. Even though the baseball hats come in a variety of colors, the hats are considered to be a single product.
Each hat sells for $20 and CEI has forecasted quarterly sales for 2020 are as follows:
Dollars Units
1st Quarter $150,000 7,500
2nd Quarter $200,000 10,000
3rd Quarter $225,000 11,250
4th Quarter $175,000 8,750
Question 1: Assume that seventy-five percent (75%) of the hats are sold for cash and the remaining sales are made on credit. The collection of credit sales is expected to be 50% in the quarter sold and 50% in the quarter following the sale. What is the amount of forecasted total cash collections for the third quarter of 2020?
Option a. $221,875
Option b. $168,750
Option c. $196,875
Option d. $225,000