Question

A company has budgeted direct materials purchases of $300,000 in July and $480,000 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 $150,000 Purchase of office equipment 72,000 Selling and Administrative Expenses 48,000 Depreciation Expense 36,000 The budgeted cash disbursements for August are what ?

Answer 1

Answer:

The budgeted cash disbursement for August is $696,000

Step-by-step explanation:

July direct material purchase is

30% of 300000 =$90000

August direct material purchase

70% of 480000 = $336000

Wage expense =$ 150000

Purchase of office equipment= $72000

Selling and administrative expense= $ 48000

Depreciation=0

Adding everything gives $696000, which is the budgeted cash disbursement for August.