A company has budgeted direct materials purchases of $300,000 in July and $480,000 in August. Past experience indicates that the company pays for 70% of its purchases in the month of purchase and the remaining 30% in the next month. During August, the following items were budgeted: Wages Expense $150,000 Purchase of office equipment 72,000 Selling and Administrative Expenses 48,000 Depreciation Expense 36,000 The budgeted cash disbursements for August are what?

Question

Malcolm Walls

Mathematics

14 March, 11:09

A company has budgeted direct materials purchases of $300,000 in July and $480,000 in August. Past experience indicates that the company pays for 70% of its purchases in the month of purchase and the remaining 30% in the next month. During August, the following items were budgeted: Wages Expense $150,000 Purchase of office equipment 72,000 Selling and Administrative Expenses 48,000 Depreciation Expense 36,000 The budgeted cash disbursements for August are what?

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Barr · Answer 1

The budgeted cash disbursement for August is $696,000

Step-by-step explanation:

July direct material purchase is

30% of 300000 = $90000

August direct material purchase

70% of 480000 = $336000

Wage expense = $ 150000

Purchase of office equipment = $72000

Selling and administrative expense = $ 48000

Depreciation=0

Adding everything gives $696000, which is the budgeted cash disbursement for August.