Question

In August, the company pays for 70% of its budgeted direct materials purchases and the remaining 30% in the next month.

a) True
b) False

Answer 1

The statement is false. In August, the company pays for 70% of its budgeted direct materials purchases and the remaining 30% in the next month.

Step-by-step explanation:

The statement is false. In August, the company pays for only 70% of its budgeted direct materials purchases, meaning that 30% of the budgeted purchases will be paid in the next month. This indicates a delay in paying for a portion of the purchases. For example, if the budgeted direct materials purchases for August is $10,000, the company will pay $7,000 in August and the remaining $3,000 in the next month.