Super Drive Is a Computer Hard Drive Manufacturer

Super Drive is a computer hard drive manufacturer. The company's balance sheet for the fiscal year ended on November 30 appears below:

Additional information regarding Super Drive's operations appear below:
• Sales are budgeted at $520,000 for December and $500,000 for January.
• Collections are expected to be 60% in the month of sale and 40% in the month following sale. There are no bad debts.
• 80% of the disk drive components are purchased in the month prior to the month of the sale, and 20% are purchased in the month of the sale. Purchased components comprise 40% of the cost of goods sold.
• Payment for components purchased is made in the month following the purchase.
• Assume that the cost of goods sold is 80% of sales.


-The budgeted cash collections for the upcoming December should be:

A) $208,000
B) $520,000
C) $402,000
D) $462,000

Correct Answer:

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