Sirignano Corporation produces and sells one product. The budgeted selling price per unit is $84. Budgeted unit sales for October, November, December, and January are 8,400, 12,000, 13,800, and 14,300 units, respectively. All sales are on credit with 40% collected in the month of the sale and 60% in the following month. The expected cash collections for November is closest to:

Question

Quizplus · Accepted Answer

The expected cash collections for November include 40% of November's sales and 60% of October's sales. November sales = 12,000 units * $84 = $1,008,000. October sales = 8,400 units * $84 = $705,600. 40% of November's sales = 0.40 * $1,008,000 = $403,200. 60% of October's sales = 0.60 * $705,600 = $423,360. Total expected cash collections for November = $403,200 + $423,360 = $826,560.

Sirignano Corporation Produces and Sells One Product