A company has budgeted direct materials purchases of $200,000 in March and $320,

Question

A company has budgeted direct materials purchases of $200,000 in March and $320,000 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
$100,000

Purchase of office equipment
48,000

Selling and Administrative Expenses
32,000

Depreciation Expense
24,000

The budgeted cash disbursements for April are

a) $488,000.
b)$284,000.
c) $432,000.
d) $464,000.

Explanation / Answer

Budgeted direct materials purchases of $200,000 in March and $320,000 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. Payment for Purchase in April 30% of March 60,000 70% of April 224,000 Total $284,000 Wages Expense $100,000 Purchase of office equipment 48,000 Selling and Administrative Expenses 32,000 Total Cash Disbursement $ 464,000 d) $464,000.

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