FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Assume a company's sales budget for April and May is 39,000 units and 41,000 units, respectively. Its production budget for the same two months is 36,000 units and 37,000 units, respectively. Each unit of finished goods required 5 pounds of raw
materials. The company always maintains raw materials inventory equal to 25% of the following months production needs.
Also assume the company pays $2.40 per pound of raw material. It always pays for 60% of its raw material purchases in the month purchase and the remainder in the following month. The accounts payable balance on March 31st is $139,000. How
much cash disbursements for raw materials purchases would be shown in the company's cash budget for April?
Multiple Choice
OOO
$400,000
$399.400
$405,000
$408,000
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Transcribed Image Text:Assume a company's sales budget for April and May is 39,000 units and 41,000 units, respectively. Its production budget for the same two months is 36,000 units and 37,000 units, respectively. Each unit of finished goods required 5 pounds of raw materials. The company always maintains raw materials inventory equal to 25% of the following months production needs. Also assume the company pays $2.40 per pound of raw material. It always pays for 60% of its raw material purchases in the month purchase and the remainder in the following month. The accounts payable balance on March 31st is $139,000. How much cash disbursements for raw materials purchases would be shown in the company's cash budget for April? Multiple Choice OOO $400,000 $399.400 $405,000 $408,000
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