m09 hq 15 cromwell company is a distributor that sells products to ret
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## M09 - HQ 15 ##
Cromwell Company is a distributor that sells products to retail companies.
The company sells one product for $200 per unit. Cromwell pays $120 to
buy the product. Cromwell 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.
Cromwell makes all sales on credit and collects 40% in the month of sale
and 60% in the month after sale. Budgeted monthly sales for the second
half of 2020 are as follows:
July
10,000 units
August
15,000 units
September
18,000 units
October
20,000 units
November
16,000 units
December
17,000 units
The cash collections in October will be
a) $3,760,000 | b) $4,000,000 | c) $4,120,000 | d) $3,840,000