Page 160 - P1 Integrated Workbook STUDENT 2018

Chapter 9

Example 5

McGrath is a new business and has forecasted their sales will be $15,000,
$20,000 and $24,000 in their first three months of trading. They estimate that
20% of customers will pay in the month of sale, 50% will wait one month to
pay and 25% will wait two months to pay (the remaining 5% are expected to
be irrecoverable debts).

To the nearest $ what will be the expected sales receipts in month 3?

Solution

Variable overheads= labour hours × standard rate per labour hour

Month Workings $
1 $15,000 × 25% 3,750
2 $20,000 × 50% 10,000
3 $24,000 × 20% 4,800
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Total receipts 18,550
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Illustrations and further practice

Now try example 2 from Chapter 11.

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