Question
Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: April May June Manufacturing costs (1) $157,000
Finch Company began its operations on March 31 of the current year. Finch has the following projected costs:
April | May | June | |
Manufacturing costs (1) | $157,000 | $195,500 | $218,900 |
Insurance expense (2) | 1,000 | 1,000 | 1,000 |
Depreciation expense | 2,050 | 2,050 | 2,050 |
Property tax expense (3) | 540 | 540 | 540 |
(1) Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month. (2) Insurance expense is $1,000 a month; however, the insurance is paid four times yearly in the first month of the quarter, (i.e., January, April, July, and October). (3) Property tax is paid once a year in November.
The cash payments expected for Finch Company in the month of May are
a.$185,875
b.$39,250
c.$225,125
d.$146,625
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