Question

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months:

January February March
Material purchases $12,040 $14,150 $10,970

Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $6,500. The budgeted cash payments for materials in January are:

a. $18,540.
b. $13,095.
c. $6,500.
d. $9,270.
e. $12,520.

Answer 1

e. $12,520.

Step-by-step explanation:

January Material purchases $12,040

Payments 50% of $12,040 =6020

December Accounts Payable balance is $6,500

Cash payments for materials in January

$6020+6500=$12,520