Question
Arnest Corp. is preparing its cash payments budget for next month, December. The following information pertains to the cash payments: a. Arnest pays for 55%
Arnest Corp. is preparing its cash payments budget for next month, December. The following information pertains to the cash payments:
a. | Arnest pays for 55% of its direct materials purchases in the month of purchase and the remainder the following month. November's direct material purchases were $75,000, while the company anticipates $88,000 of direct material purchases in December. |
b. | Direct labor for December is budgeted to be $39,400 and will be paid at the end of that month. |
c. | Manufacturing overhead is estimated to be 140% of direct labor cost each month. All but $11,000 of these costs are paid in the month in which they are incurred. Assume there are no outstanding payables from the prior month to be paid. |
d. | Monthly operating expenses for December are expected to be $44,800. All but $3,400 of these operating expenses are paid during the month in which they are incurred. Assume there are no outstanding payables from the prior month to be paid. |
e. | Arnest will be making an estimated tax payment of $7,700 in December. |
f. | The CEO of Arnest decided to spend $14,000 to overhaul the engine of one of its delivery trucks which will extend the life another five years. The repair is considered a capital expenditure which will be completed and paid in full in December. |
Required:
How much cash will Arnest Corp. pay out in December?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started