Correy Inc •All Sales Are on Credit

question 64

Multiple Choice

Correy Inc.reported the following information for 2016: $\begin{array}{lr}&\text { October }&\text { November }&\text { December }\\\text { Budgeted sales } & \$ 460,000 & \$ 440,000 & \$ 540,000 \\\text { Budgeted purchases } & \$ 240,000 & \$ 256,000 & \$ 288,000\end{array}$ •All sales are on credit.
•Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
•Cost of goods sold is 35% of sales.
•Correy purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month.
•Accounts payable is used only for inventory acquisitions.
How much cash will Correy receive during November?

• A)$220,000
• B)$490,000
• C)$450,000
• D)$440,000

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Definitions:

Actual Output

The real quantity of goods or services produced by a company, as opposed to estimated or planned production levels.

Standard Cost System

An accounting system that uses predetermined costs for products or services to facilitate variance analysis and budgeting.

Direct Labour Hours

Total hours accumulated by workers directly involved in the fabrication process.

Direct Materials Inventory

The total cost of raw materials that are directly involved in the manufacturing of a product and are currently held in inventory.