Question

Hagen Company’s budgeted sales and direct materials purchase are as follows.

Budgeted Sales Budgeted D.M. Purchases
January $300000 $60000
February 330000 70000
March 350000 80000
Hagen’s sales are 40% cash and 60% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Hagen’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchases, and 60% in the month following purchases.
Prepare a schedule of expected payments for direct materials for March.

Answer 1

Expected payment for march=$74,000

Step-by-step explanation:

Expected payment for march

40% in the month of purchase

(40%× march sales ) = 40% × 80,000 =32,000

60% in the following month:

60%× February sales= 60% × 70,000 = 42000

Expected payment in March= 32000 +42000 =74000

Expected payment for march=$74,000