Question

Burr, Inc.'s direct materials budget shows total cost of direct materials purchases for April $400,000, May $480,000 and June $560,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for June are:

Answer 1

$528,000

Step-by-step explanation:

Total cost of direct materials purchases:

April = $400,000

May = $480,000

June = $560,000

Cash payments are 60% in the month of purchase and 40% in the following month.

Budgeted cash payments for June:

= 60% of direct materials purchases in June + 40% of direct materials purchases in May

= (0.6 × $560,000) + (0.4 × $480,000)

= $336,000 + $192,000

= $528,000