New Ventures intends to start business on January 1. Production plans for the first four months of operations are as follows:
January
17,000
units
February
44,000
units
March
85,000
units
April
85,000
units
Each unit requires 4 kilograms of material. The firm would like to end each month with enough raw material inventory on hand to cover 25% of the following months production needs. The material costs $6 per kilogram. Management anticipates being able to pay for 40% of the purchases in the month of purchase. The firm will receive a 13% discount for these early payments. Management anticipates having to defer payment to the next month on 60% of the firms purchases. No discount will be taken on these late payments. The business starts with no inventories on January 1.
Determine the budgeted payments for purchases of materials for each of the first three months of operations. (Round answers to the nearest whole dollar, e.g. 5,275.)
January
February
March
Payments for purchases of materials
$
$
$
Answer & Explanation
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