Question

Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: April May JuneManufacturing costs (1) $155,800 $190,300 $203,900Insurance expense (2) 1,080 1,080 1,080Depreciation expense 2,110 2,110 2,110Property tax expense (3) 540 540 540(1) Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month.(2) Insurance expense is $1,070 a month; however, the insurance is paid four times yearly in the first month of the quarter, (i.e., January, April, July, and October).(3) Property tax is paid once a year in November.The cash payments expected for Finch Company in the month of May area. $38,950b. $181,675c. $220,625d. $142,725

Answer 1

Answer:

Total cash expense= $181,675

Explanation:

Giving the following information:

Manufacturing cost:

April= $155,800

May= $190,300

Insurance is not paid in May.

Property tax is paid in November.

Depreciation is not a cash expense.

Total cash payment May:

Manufacturing cost May= 190,300*0.75= 142,725

Manufacturing cost April= 155,800*0.25= 38,950

Total cash expense= $181,675