A company has budgeted direct materials purchases of $150,000 in March and $240,

Question

  A company has budgeted direct materials purchases of $150,000 in March and $240,000 in April. Past experience indicates that the company pays for 70% of its purchases in the month of purchase and the remaining 30% in the next month. During April, the following items were budgeted:

Wages Expense $75,000

Purchase of office equipment 36,000

Selling and Administrative Expenses 24,000

Depreciation Expense 18,000

The budgeted cash disbursements for April are:

a.                   $324,000.

b.                  $213,000.

c.                   $348,000.

d.                 $366,000.

Explanation / Answer

ans = 240000 * 0.7 + 150000 * 0.3 = 213000

Hence

b. $213,000

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