Scare-2-B-U (S2BU) specializes in costumes for all occasions. The average price of each of its costumes is $310. For each occasion, S2BU receives a 20 percent deposit two months before the occasion, 50 percent the month before, and the remainder on the day the costume is delivered. Based on information at hand, managers at S2BU expect to make costumes for the following number of occasions during the coming months. April 40
May 35
June 20
July 30
August 55
September 120
Required:
(a) What are the expected revenues for S2BU for each month, April through September? Revenues are recorded in the month of the occasion.
(b) What are the expected cash receipts for each month, April through July?

Scare-2-B-U (S2BU)

a) The expected revenues for each month:

Month        Number of Occasions  Expected Revenue

April                         40                          $12,400

May                          35                            10,850

June                        20                             6,200

July                          30                             9,300

August                     55                           17,050

September             120                          37,200

Total                      300                        $93,000

b) The expected cash receipts:

                                  April        May         June       July  

Expected revenue $12,400  $10,850   $6,200   $9,300

20% 2 months         $1,240    $1,860     $3,410    $7,440

50% 1 month             5,425      3,100       4,650     8,525

30% delivery date     3,720     3,255        1,860     2,790

Cash receipts        $10,385   $8,215     $9,920  $18,755

Explanation:

a) Data and Calculations:

Average selling price for each costume = $310

Cash Collections:

20% 2 months before delivery

50% 1 month before delivery

30% on the delivery date

Month        Number of Occasions  Expected Revenue

April                         40                          $12,400

May                          35                            10,850

June                        20                             6,200

July                          30                             9,300

August                     55                           17,050

September             120                          37,200

Total                      300                        $93,000

                                  April        May         June       July      August    Sept.

Expected revenue $12,400  $10,850   $6,200   $9,300  $17,050  $37,200

20% 2 months         $1,240    $1,860     $3,410   $7,440

50% 1 month             5,425      3,100       4,650    8,525   $18,600

30% delivery date     3,720     3,255        1,860    2,790        5,115    $11,160

Cash receipts        $10,385   $8,215     $9,920 $18,755

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