61. Purchases: Jan $10,000, Feb $20,000, Mar $25,000, Apr $22,000, May $27,000, Jun $30,000. Payment pattern: 40 % month of purchase, 35 % next, 25 % second. What are budgeted cash disbursements for May?
Answer: C
The budgeted cash disbursements for May are $25,050.
To calculate the budgeted cash disbursements for May, we must consider the payment pattern for purchases made in May and the previous months. This includes 40% of May's purchases, 35% of April's purchases, and 25% of March's purchases.
A) $18,500
This option is incorrect as it underestimates the cash disbursements for May. It does not account for the appropriate proportions of payments from May, April, and March. The calculations for these months must be accurately performed to arrive at the correct total.
B) $24,750
This option is also incorrect. It likely reflects a miscalculation of the proportions of cash disbursements from the purchases in relevant months. The amounts from all three months need to be summed correctly to reach the accurate total disbursement for May.
C) $25,050
This option is correct. The budgeted cash disbursements for May include 40% of May's purchases ($27,000), which is $10,800, 35% of April's purchases ($22,000), which is $7,700, and 25% of March's purchases ($25,000), which is $6,250. Adding these amounts together ($10,800 + $7,700 + $6,250) gives a total of $25,050.
D) $27,300
This option is incorrect and overstates the budgeted disbursements for May. It likely includes incorrect calculations or assumptions about the payments from previous months. The accurate disbursements must reflect the proper proportions based on the outlined payment pattern.
Conclusion
In conclusion, the correct budgeted cash disbursements for May is $25,050, as it accurately follows the payment pattern of 40% for the current month, 35% for the previous month, and 25% for the month before that. All other options either miscalculate the contributions from the relevant months or fail to apply the correct percentages.