Card Cavern is a retail store selling video games. Sales are uniform for most of
ID: 2454917 • Letter: C
Question
Card Cavern is a retail store selling video games. Sales are uniform for most of the year but pick up in June and December both games in anticipation of summer and winter holidays. Card Cavern also sells and repairs game systems. The forecast of sales and service revenue for the March-June 2014 is as follows.
March Expected Sales Revenue= $9000 Expected Service Revenue=$1200 Total Revenue=$10,200
April Expected Sales Revenue= $10000 Expected Service Revenue= $1500 Total Revenue= $11500
May Expected Sales Revenue= $10800 Expected Service Revenue= $2100 Total Revenue= $ 12900
June Expected Sales Revenue= $ 18800 Expected Service Revenue= $ 4500 Total Revenue= $23300
Almost all the service revenue is paid for by bank credit card so Card Cavern budgets this as 100% bank card revenue. The bank charge and average fee of 3% of the total. Half of the sales revenue is also paid for by bank credit card, for which the fee is also 3% on average. About 30% of the sales are paid in cash, and the rest (remaining 20%) are carried on a store account. Although the store tries to give store credit to only the best customers, if still averages about 2% of uncollectible accounts: 70% of store accounts are paid in the month following the purchase and 28% are paid 2 month after the purchase.
Solve for the following
March sales revenue collected in May?
March sales revenue collected in April?
April sales revenue collected in May?
April sales revenue collected in June?
May sales revenue collected in May?
May sales revenue collected in June?
June sales revenue collected in June?
Explanation / Answer
March Sales = $9000
Out of this 20% are on store account = 20% of 9000 = $1800
March sales revenue collected in April = 70% of 1800 = $1260
March sales revenue collected in May = 28% of 1800 = $504
April Sales = $10000
Out of this 20% are on store account = 20% of 10000 = $2000
April sales revenue collected in May = 70% of 2000 = $1400
April sales revenue collected in June = 28% of 2000 = $560
May Sales = $10800
May sales revenue collected in May = 10800*47%(50%-3%) + 10800*30% = %15876
Out of this 20% are on store account = 20% of 10800 = $2160
May sales revenue collected in June = 70% of 2160 = $1512
June Sales = $18800
June sales revenue collected in June = 18800*47%(50%-3%) + 18800*30% = $14476