Fuson Corporation makes one product and has provided the following information t

Question

Fuson Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:

Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month’s raw materials production needs.

If the budgeted cost of raw materials purchases in October is $116,772 and in November is $129,120, then in November the total budgeted cash disbursements for raw materials purchases is closest to:

Multiple Choice

$81,740

$120,476

$90,384

$38,736

Budgeted selling price per unit $ 118 Budgeted unit sales (all on credit): October 9,600 November 10,100 December 13,700 January 11,300

Explanation / Answer

Calculate total cash disbursement in november :

Cash disbursement in november = (129120*30%+116772*70%) = 120476

So answer is b) $120476

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