Cappin' manufactures personalized baseball caps for companies. The company has production levels budgeted for this period of 5,000 caps. Each cap requires 1 yard of fabric to manufacture. The company has a policy of always having 300 yards of fabric on hand at the end of the period, in case of excess demand. Last period orders were higher than expected, so the company ended the period with only 175 yards of fabric on hand. Fabric costs $8/yard, and Cappin' has an agreement to pay their supplier 75% of the cost of purchases in the month bought, and the remainder in the month following. The Accounts Payable balance at the beginning of the period is $15,000.
What is the budgeted amount of cash to be paid for raw materials this month?

Question

Cappin' manufactures personalized baseball caps for companies. The company has production levels budgeted for this period of 5,000 caps. Each cap requires 1 yard of fabric to manufacture. The company has a policy of always having 300 yards of fabric on hand at the end of the period, in case of excess demand. Last period orders were higher than expected, so the company ended the period with only 175 yards of fabric on hand. Fabric costs $8/yard, and Cappin' has an agreement to pay their supplier 75% of the cost of purchases in the month bought, and the remainder in the month following. The Accounts Payable balance at the beginning of the period is $15,000. 
What is the budgeted amount of cash to be paid for raw materials this month?

Quizplus · Accepted Answer

The Answer of Cappin' manufactures personalized baseball caps for companies. The company has production levels budgeted for this period of 5,000 caps. Each cap requires 1 yard of fabric to manufacture. The company has a policy of always having 300 yards of fabric on hand at the end of the period, in case of excess demand. Last period orders were higher than expected, so the company ended the period with only 175 yards of fabric on hand. Fabric costs $8/yard, and Cappin' has an agreement to pay their supplier 75% of the cost of purchases in the month bought, and the remainder in the month following. The Accounts Payable balance at the beginning of the period is $15,000. 
What is the budgeted amount of cash to be paid for raw materials this month?

Cappin' Manufactures Personalized Baseball Caps for Companies