Question 1: Centennial Tours is trying to decide which one of two tours it will introduce. The costs and revenues associated with each alternative are listed below:
Tour A Tour B
Projected revenue $7,000 $9,000
Variable costs 1,000 5,000
Fixed costs 3,000 3,000
Profit $3,000 $1,000
What are the incremental (differential) costs of Tour B?
A) $2,000
B) $3,000
C) $4,000
D) None of the above
Question 2: Crowe Company expects the following total sales:
Month Sales
March $30,000
April $20,000
May $30,000
June $25,000
The company expects 70% of its sales to be credit sales and 30% for cash. Credit sales are collected as follows: 25% in the month of sale, 72% in the month following the sale with the remainder being uncollectible and written off in the month following the sale. The budgeted accounts receivable balance on May 31 is
A) $14,350
B) $15,750
C) $20,550
D) $22,500
Question 3: Bruce Company's sales budget shows the following expected total sales:
Month Sales
January $25,000
February $30,000
March $35,000
April $40,000
The company expects 70% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 72% in the month following the sale with the remainder being uncollectible and written off in the month following the sale. The total cash inflows from the collection of receivables in April would be
A) $18,200
B) $21,000
C) $24,640
D) $25,725