**Educational Content: Budgeting and Raw Material Purchases****Scenario Overview:**A company's sales budget for November and December is set at 46,000 units and 48,000 units, respectively. The production budget for these months is slightly lower, with 43,000 units for November and 44,000 units for December. Each unit of finished goods requires 4 pounds of raw materials. Moreover, the company maintains a raw materials inventory equal to 20% of the needs for the following month's production.**Payment Policy:**The company pays $2.75 per pound for raw materials, paying 50% of the cost in the purchase month and the remaining 50% in the following month. The accounts payable balance as of October 31st is $146,000.**Task:**Calculate the amount the company should show in its November cash budget for cash disbursements for raw material purchases.**Multiple Choice Options:**1. $391,6002. $382,8503. $388,6004. $383,600*Note:* The text includes multiple choice options for the budget calculation task but does not provide additional context or specific instructions for which calculations to perform to determine the correct answer.

solution: Budgeted quantity of purchases of raw materials in November = Budgeted requirement of material to meets production + Desired ending inventory - Beginning inventory = (43000*4) + (44000*4*20%) - (43000*4*20%) = 172800 Budgeted cost of raw material purchases in november = 172800 * $2.75 = $475,200 Cash disbursement of raw material purchases in November = Payment for Oct purchases + Payment for november purchases = $146,000 + ($475,200*50%) = $383,600 Hence last option is correct.

Business

Accounting

The sales budget of a company for November and December is 46,000 units and 48,000 units, respectively. Its production budget for the same two months is 43,000 units and 44,000 units, respectively. Each unit of finished goods requires 4 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the following months production needs. Assume the company pays $2.75 per pound of raw material. It always pays for 50% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on October 31st is $146,00O. What amount would the company show in their November cash budget for cash disbursements for raw material purchases?

The sales budget of a company for November and December is 46,000 units and 48,000 units, respectively. Its production budget for the same two months is 43,000 units and 44,000 units, respectively. Each unit of finished goods requires 4 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the following months production needs. Assume the company pays $2.75 per pound of raw material. It always pays for 50% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on October 31st is $146,00O. What amount would the company show in their November cash budget for cash disbursements for raw material purchases?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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