The following information is from the manufacturing budget and the budgeted fina

Question

The following information is from the manufacturing budget and the budgeted financial statements of Fabor F Direct materials inventory, January1 Direct materials inventory, December 31 Direct materials budgeted for use during the year Accounts payable to suppliers of materials, January 1 Accounts payable to suppliers of materials, December 31 $68,000 44,000 280,000 50,000 79,000 a. Compute the budgeted amount for purchases of direct materials during the year b. Compute the budgeted amount for cash payments during the year to suppliers of materials. a Budgeted amount for purchases of direct materials b. Budgeted cash payments

Explanation / Answer

a. Budgeted amount for purchases of direct materials = Ending inventory + Material budgeted for use during the year - Beginning inventory = $44,000 + $280,000 - $68,000 = $256,000

b. Budgeted amount for cash payments during the year to suppliers of materials = Accounts payable (beginning of year) + Budgeted purchases - Accounts payable (end of year) = $50,000 + $256,000 - $79,000 = $227,000

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