Question

bramble corp direct material shows direct materials purchase for January $301000. February $412000 and march $400000.Cash payment are 60% in the month of purchase and 40% in the following month. The budget cash disbursement for direct materials purchase in march are?

Answer 1

The budget cash disbursement for direct materials purchase in March is $171,120.

Step-by-step explanation:

In order to determine the budget cash disbursement for direct materials purchase in March, we need to consider the purchases made in January and February. Let's break it down:

1. In January, the direct materials purchase was $301,000. Since 60% of the cash payment is made in the month of purchase, the cash disbursement in January would be 60% of $301,000, which is $180,600.
2. In February, the direct materials purchase was $412,000. As 60% of the cash payment is made in the month of purchase, the cash disbursement in February would be 60% of $412,000, which is $247,200.

Now, in March, we need to consider the cash payment for the purchases made in January and February. Since 40% of the cash payment is made in the following month, the cash disbursement in March would be 40% of the cash payment for January ($180,600) and February ($247,200). Let's calculate:

Cash payment in March = (40% of $180,600) + (40% of $247,200) = $72,240 + $98,880 = $171,120.

Therefore, the budget cash disbursement for direct materials purchase in March would be $171,120.