QUESTION 45

1. Davy Johnson is CFO for a newly formed manufacturing company. Below is the anticipated monthly production for the first six months of operation. Davy is interested in learning which of the first six months will require cash outlays of more than $40,000 toward the purchase of materials. Each unit requires 5 pounds of material at $10 per pound. All material is purchased in the month prior to its expected use. Purchases are paid for 10% in the month of purchase, 40% in the month following the month of purchase, and 50% in the second month following the month of purchase. Compute the total amount paid for March.
   	UNITS Purchasing Activity (Month prior to production)	Total Pounds used in Production	Total materials cost	Paid in Month (10%)	Paid in Month Relating to Prior Month (40%)	Paid in Month Relating to Two Months Prior (50%)	Total Paid in month
   January	800	4,000
   February	500	2,500
   March	1,200	6,000
   April	700	3,500
   May	900	4,500
   June	600	3,000
   Totals

   		$42,500
   		$36,000
   		$40,000
   		$38,500

QUESTION 46

1. Davy Johnson is CFO for a newly formed manufacturing company. Below is the anticipated monthly production for the first six months of operation. Davy is interested in learning which of the first six months will require cash outlays of more than $40,000 toward the purchase of materials. Each unit requires 5 pounds of material at $10 per pound. All material is purchased in the month prior to its expected use. Purchases are paid for 10% in the month of purchase, 40% in the month following the month of purchase, and 50% in the second month following the month of purchase. Compute the total amount paid for April.
   	UNITS Purchasing Activity (Month prior to production)	Total Pounds used in Production	Total materials cost	Paid in Month (10%)	Paid in Month Relating to Prior Month (40%)	Paid in Month Relating to Two Months Prior (50%)	Total Paid in month
   January	800	4,000
   February	500	2,500
   March	1,200	6,000
   April	700	3,500
   May	900	4,500
   June	600	3,000
   Totals

   		$40,000
   		$36,000
   		$42,000
   		$38,500