Quagmire Inc. has prepared the following sales budget for the quarter of April,
ID: 2515988 • Letter: Q
Question
Quagmire Inc. has prepared the following sales budget for the quarter of April, May and June:
All of the sales are on credit.
Quagmire collects from customers as follows:
40% of sales in the month of sale
25% in the month following the sale, and
35% in the second month following the sale.
Quagmire expects cost of goods sold to be 60% of sales.
They keep 10% of next months expected cost of goods sold in ending inventory. Below are budgeted purchases of inventory.
All purchases are paid for in the SAME month as the purchase.
Explanation / Answer
How much will Quagmire pay (in cash) for purchases in June?
307,800 (as purchases are paid in the same month as the purchases)
How much does Quagmire pay for variable S&A expenses in May?
93,600 (As selling and admistrative expenses are paid in the month after they are incurred)
How much does Quagmire pay for fixed S&A expenses in May?
194,400 (216,000-21,600) (As selling and admistrative expenses are paid in the month after they are incurred)