Company began its operations on May 31 of the current year. Projected manufactur

Question

Company began its operations on May 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for June, July, and August. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on May 31, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.
The cash payments for manufacturing in the month of August are:

Explanation / Answer

Hi,

Cash Payment for August = (217600 - 28800)*3/4 + (195200 - 28800)*1/4 = 183200

Thanks.

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