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Exercise 10.41 ...

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Accounting

Exercise 10.41

New Ventures intends to start business on January 1. Production plans for the first four months of operations are as follows:

January 17,000 units
February 44,000 units
March 85,000 units
April 85,000 units

Each unit requires 4 kilograms of material. The firm would like to end each month with enough raw material inventory on hand to cover 25% of the following months production needs. The material costs $6 per kilogram. Management anticipates being able to pay for 40% of the purchases in the month of purchase. The firm will receive a 13% discount for these early payments. Management anticipates having to defer payment to the next month on 60% of the firms purchases. No discount will be taken on these late payments. The business starts with no inventories on January 1.

Determine the budgeted payments for purchases of materials for each of the first three months of operations. (Round answers to the nearest whole dollar, e.g. 5,275.)

January February March
Payments for purchases of materials $

$

$

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