Catano Corporation pays for 40% of its raw materials purchases in the month of purchase and 60% in the following month. If the budgeted cost of raw materials purchases in July is $256,550 and in August is $278,050, then in August the total budgeted cash disbursements for raw materials purchases is closest to:

Question

Quizplus · Accepted Answer

In August, Catano Corporation will pay 40% of August's purchases and 60% of July's purchases. For July ($256,550), 60% is $153,930. For August ($278,050), 40% is $111,220. Adding these together gives $265,150 ($153,930 + $111,220).

Catano Corporation Pays for 40% of Its Raw Materials Purchases