Preparing a cash payments budget Maria Bockman, Bates & Hill Fabricators accounts payable manager, has just received the companys direct materials purchases budget for the first quarter (see Exercise 5.15). The company makes all of its direct materials purchases on account. Marias recent review of the companys payment history revealed that the company pays for 25% of its direct materials purchases in the month of purchase and 75% in the month following purchase. The company expects to have an accounts payable balance of $18,000 on January 1, and this amount represents the remaining payables from Decembers direct materials purchases.

Required

Prepare Bates & Hills cash payments budget for the first quarter.

Exercise 5.15 DM Purchases budget Quarter 88,600.00 6 Budgeted production Standard pounds per unit Production needs Budgeted ending inventory Total DM required (lbs.) Beginning Inventory Budgeted purchases Standard cost per pound Budgeted purchases cost January February March $ 27,400.00 $ 28,800.00 $ 32,400.00 $ 6 6 6 164,400 172,800 194,400 17,280 19,440 19,440 181,680 192,240 213,840 15,000 17,280 19,440 166,680 174,960 194,400 $ 1.50 $ 1.50 $ 1.50 $ $ 250,020.00 $ 262,440.00 $ 291,600.00 $ 531,600 19,440 551,040 15,000 536,040 1.50 804,060.00