Question

A company has budgeted direct materials purchases of $210000 in July and $390000 in August. 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 August, the following items were budgeted:
Wages Expense $50000
Purchase of office equipment 62000
Selling and Administrative Expenses 38000
Depreciation Expense 26000

The budgeted cash disbursements for August are:

Answer 1

Answer:

$486,000

Explanation:

According to the scenario, computation of the given data are as follow:-

                          Budgeted Cash Disbursements for August

Particular                                                           Amount ($)

Direct material purchase for July ($210,000 × 30%) 63,000

Direct material purchase for August ($390,000 × 70%) 273,000

Add-wages paid 50,000

Add: Office equipment purchase 62,000

Add: Selling and administrative expenses 38,000

Total                                                           486,000

The depreciation is a non cash expense and the same is not relevant. Hence, ignored it