Question
Use the following information for problems 17 and 18: ABC Company began its operations on March 31 of the current year. ABC Company has the
Use the following information for problems 17 and 18: ABC Company began its operations on March 31 of the current year. ABC Company has the following projected costs:
April | May | June | |
Manufacturing costs (1) | $156,800 | $195,200 | $217,600 |
Insurance expense (2) | $ 1,000 | $ 1,000 | $ 1,000 |
Depreciation expense | $ 2,000 | $ 2,000 | $ 2,000 |
Property tax expense (3) | $ 500 | $ 500 | $ 500 |
(1) 3/4 of the manufacturing costs are paid for in the month they are incurred and 1/4 are paid in the following month.
(2) Insurance expense is $1,000 a month. However, the insurance expense is paid four times yearly in the first month of the quarter (January, April, July, and October).
(3) Property tax is paid once a year in November.
17. The cash payments for ABC Company in the month of April are:
a. $122,600 |
b. $123,100 |
c. $120,600 |
d. $121,100 |
18. The cash payments for ABC Company in the month of May are
a. $187,600 |
b. $149,900 |
c. $185,600 |
d. $189,100 |
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