The Hug-a-Bear company makes its teddy bears the month before they are sold and
ID: 2794826 • Letter: T
Question
The Hug-a-Bear company makes its teddy bears the month before they are sold and pays for all materials in the month of purchase. If sales of $1.9 million are expected in November and the firm pays 60 percent of sales in material costs, then what is the materials cash disbursement in October? (Enter your answer in millions of dollars rounded to 2 decimal places.)
The Hug-a-Bear company makes its teddy bears the month before they are sold and pays for all materials in the month of purchase. If sales of $1.9 million are expected in November and the firm pays 60 percent of sales in material costs, then what is the materials cash disbursement in October? (Enter your answer in millions of dollars rounded to 2 decimal places.)
Explanation / Answer
Total material cost disbursement in Oct is $1,140,000.
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Sale figure of Nov is $1900000, so the production will be done in the month of Oct, and material will be purchased at the beginning of the Oct month.
Firm pay 60% of te sale in material cost, so Total material cost will be (1900000*0.6 = 1140000)
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