Question

The Brenneman Company's direct materials budget shows total cost of direct materials purchases for January $125,000, February $150,000 and March $175,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are:A: $160,000B: $130,000C: $165,000D: $150,000

Answer 1

Answer:

C) $165,000

Explanation:

To determine the total amount that Brenneman has to pay during March, we have to first calculate the percentage owed from February and March:

Total purchases during February $150,000 x 40% (percentage due in March)  = $60,000

Total purchases during March $175,000 x 60% (percentage due in March)  = $105,000

Total payments due in March = $60,000 + $105,000 = $165,000