Question

Baylor Company began its operations on March 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $198,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 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. The cash payments for manufacturing in the month of June are:___________.a. $212,750b. $183,200c. $183,950d. $217,600

Answer 1

Answer:

c. $183,950

Explanation:

The calculation of cash payments for manufacturing in the month of June is shown below:-

Cash payment = 3 ÷ 4 × June Manufacturing Costs + 1 ÷ 4th × May Manufacturing Costs

= ($217,600 - $28,800) × 3 ÷ 4 + ($198,200 - $28,800) × 1 ÷ 4

= $188,800 × 0.75 + $169,400 × 0.25

= $141,600 + $42,350

= $183,950

So, we have applied the above formula.