Assume a company’s sales budget for April and May is 38,000 units and 40,000 units, respectively. Its production budget for the same two months is 35,000 units and 36,000 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the following months production needs.Also, assume the company pays $2.35 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 March 31st is $138,000. What would be the accounts payable balance at the end of April? Assume a company's sales budget for April and May is 38,000 units and 40,000 units, respectively. Its production budget for the same two months is 35,000 units and 36,000units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the followingmonths production needs.Also assume the company pays $2.35 per pound of raw material. It always pays for 50% of its raw material purchases in the month of purchase and the remainder in thefollowing month. The accounts payable balance on March 31st is $138,000. What would be the accounts payable balance at the end of April?Multiple Choice$168,940$155,440$165,440$170,440

Solution: Accounts payable balance at the end of April = 50% of raw material purchase of April…

Answered: Assume a company’s sales budget for…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 34E: A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and...

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Assume a company’s sales budget for April and May is 38,000 units and 40,000 units, respectively. Its production budget for the same two months is 35,000 units and 36,000 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the following months production needs.

Also, assume the company pays $2.35 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 March 31^st is $138,000. What would be the accounts payable balance at the end of April?

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