Solution-Determine the budgeted payments for purchases of

Determine the budgeted payments for purchases of materials

Reference no: EM132725655

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

January 20,000 units
February 46,000 units
March 84,000 units
April 84,000 units

Each unit requires 3 kilograms of material. The firm would like to end each month with enough raw material inventory on hand to cover 25% of the following month's 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 10% discount for these early payments. Management anticipates having to defer payment to the next month on 60% of the firm's purchases. No discount will be taken on these late payments. The business starts with no inventories on January 1.

Problem 1: Determine the budgeted payments for purchases of materials for each of the first three months of operations.

Reference no: EM132725655

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Determine the budgeted payments for purchases of materials

Reference no: EM132725655

Reference no: EM132725655

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