If the budgeted cost of raw materials purchases in October is $116,772 and in November is $129,120, then in November the total budgeted cash disbursements for raw materials purchases is closest to:

A) $81,740
B) $90,384
C) $38,736
D) $120,476

Question

Shruti Rangu · Accepted Answer

Final Answer : D, Explanation :  We can assume that all purchases are on credit and are paid for in the same month.To find the total budgeted cash disbursements for raw materials purchases in November, we need to subtract the non-cash purchases from the total purchases and add any increase in accounts payable.Total purchases in November can be found by subtracting the October purchases from the November purchases:$129,120 - $116,772 = $12,348Non-cash purchases would be any purchases made on credit or debit card, so we can assume the entire $12,348 is on credit.To find the increase in accounts payable, we need to subtract the October accounts payable balance from the November accounts payable balance. Unfortunately, we don't have that information.Therefore, our best estimate for the total budgeted cash disbursements for raw materials purchases in November is the total purchases minus the non-cash purchases:$129,120 - $12,348 = $116,772This matches the budgeted cost of raw materials purchases in October, so it seems unlikely that this is the correct answer.The only answer choice that is significantly different from the November purchases is D: $120,476. This implies there is an increase in accounts payable of $3,704 ($120,476 - $116,772), which is plausible. Therefore, D is the best choice. The estimated cash disbursements for materials purchases in November is computed as follows:

If the budgeted cost of raw materials purchases in October is $116,772 and in November is $129,120, then in November the total budgeted cash disbursements for raw materials purchases is closest to:

A) $81,740
B) $90,384
C) $38,736
D) $120,476

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Related questions

If the budgeted cost of raw materials purchases in October is $116,772 and in November is $129,120, then in November the total budgeted cash disbursements for raw materials purchases is closest to:A) $81,740B) $90,384C) $38,736D) $120,476

Definitions

Learning Objectives

Learning Objectives

Related questions

If the budgeted cost of raw materials purchases in October is $116,772 and in November is $129,120, then in November the total budgeted cash disbursements for raw materials purchases is closest to:

A) $81,740
B) $90,384
C) $38,736
D) $120,476