Kidder Company began its operations on March 31 of the current year. Projected m
ID: 2776960 • Letter: K
Question
Kidder Company began its operations on March 31 of the current year. Projected manufacturing costs for the first three months of business are $158,743, $195,002, and $217,790, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $26,974 of the estimated monthly manufacturing costs. Insurance was paid on March 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.
What are the cash payments for manufacturing in the month of May
Select the correct answer.
$98,827 $158,963 $158,743 $39,686Explanation / Answer
Manufacturing payments in May = 1/4th of (158,743 - 26,974) + 3/4th of (195,002 - 26,974)
= $ 158,963
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