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 2-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

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 2-month delay.So, for September, Zeta Stores will pay for the goods ordered in July and August.In July, the sales forecast was $10 million, so Zeta Stores ordered goods worth 60% of $10 million = $6 million.In August, the sales forecast was $12 million, so Zeta Stores ordered goods worth 60% of $12 million = $7.2 million.Therefore, the total forecast cash outflow in September will be $6 million + $7.2 million = $13.2 million.

Zeta Stores Places Orders for 60% of the Sales Forecast