Question

Direct materials purchases are estimated to be $300,000, $360,000 and $450,000 for June, July, and August, respectively. Cash payments are paid such that 60% are paid in the month incurred and 40% are paid in the following month. What are the budgeted cash payments for July and August, respectively

Answer 1

$336,000 and $414,000

Step-by-step explanation:

The computation of the budgeted cash payments for July and August is shown below:

For July month

= 60% of $360,000 (July) = $216,000

And,

= 40% of $300,000(June)

= $120,000

Total = $336,000

For August

= 60% of $450,000(Aug)

= $270,000

And,

= 40% of $360,000(July)

= $144,000

Total = $414,000