Blustery Fans is a manufacturer of oscillating fans. It has budgeted direct mate
ID: 2492163 • Letter: B
Question
Blustery Fans is a manufacturer of oscillating fans. It has budgeted direct materials purchases of $100,000 in March and $160,000 in April. Past experience indicates that Blustery pays for 70% of its purchases in the month of purchase and the remaining 30% in the next month. In addition to di- rect materials, the following items were budgeted for April: Wages expense $50,000 Purchase of office equipment 24,000 Operating expenses (paid as incurred) 16,000 Depreciation expense 12,000
The budgeted cash disbursements for April are a. $216,000. b. $142,000. c. $232,000. d. $244,000.
Explanation / Answer
Answer. C. $232,000 April Payment for Direct Material March - 100,000 X 30% 30,000 April - 160,000 X 70% 112,000 Total Cash paid for Material 142,000 Expenses Paid Wage Expenses 50,000 Operating Expenses 16,000 Total Expenses Paid 66,000 Purchase of Equipment 24,000 Total Cash Disbursements 232,000