Zeta Stores places orders for 60% of the sales forecast in the next month and for 40% of the sales forecast for the following month.It pays for these goods with a 1-month delay? If sales for August are forecast at $10 million and sales for September and October are forecast at $12 million,what will be the forecast cash outflow in September?

Question

Quizplus · Accepted Answer

- For August, Zeta Stores will place orders for 60% of the sales forecast, which amounts to $6 million.
- For September and October, Zeta Stores will place orders for 40% of the sales forecast, which amounts to $4.8 million (($12 million x 40%)/2).
- Since Zeta Stores pays for these goods with a 1-month delay, the forecast cash outflow for September will be the sum of the orders placed for August ($6 million) and half of the orders placed for September and October ($2.4 million).
- Therefore, the forecast cash outflow in September will be $6 million + $2.4 million = $8.4 million. However, since the question specifically asks for the cash outflow for September only, we need to choose the option that corresponds to this amount in the answer choices.
- The only answer choice that is closest to $8.4 million is D) $9.6 million. This is because Zeta Stores will pay for the orders placed in August in September, along with half of the orders placed for September and October, as explained above.

Zeta Stores Places Orders for 60% of the Sales Forecast