Tadfield Dairy Farm is based near Bathurst and makes tubs of gourmet ice cream sold online to customers on credit (40% of sales) and to customers on the farm for cash (60% of sales). Tadfield Dairy Farm is preparing a sales budget for October. September sales were 1400 tubs. October sales are estimated to be 1700 tubs. The average selling price per tub is $10. Credit customers pay 80% in the month after sale. The remaining credit sales are bad. What is the estimated total cash collected in the sales budget for October? a. $17,000 b. $14,680 c. $10,200 d. $15,800

ANSWER: C. $10,200 STEP-BY-STEP EXPLANATION: To calculate the estimated total cash collected in the sales budget for October, we need to consider both cash sales and credit sales, along with the collection period for credit sales. Let's break it down step by step: 1. Cash Sales: - October sales are estimated to be 1700 tubs. - 60% of sales are cash sales, so cash sales are 0.60 * 1700 * $10 = $10,200. 2. Credit Sales: - 40% of sales are credit sales, so credit sales are 0.40 * 1700 * $10 = $6,800. - Credit customers pay 80% in the month after the sale, which means 80% of credit sales for October will be received in November. - So, $6,800 * 0.80 = $5,440 of credit sales will be collected in November. 3. Bad Debts: - The remaining credit sales are bad debts, which means they will not be collected. Now, let's calculate the total cash collected in October: Total Cash Collected = Cash Sales + Credit Sales Collected in October Total Cash Collected = $10,200 + $0 (bad debts) Total Cash Collected in October = $10,200 So, the estimated total cash collected in the sales budget for October is $10,200.