Allen, Inc

question 72

Multiple Choice

Allen, Inc. has the following disbursements: * Variable manufacturing costs are $3 per unit. They are paid 40% in the month of purchase and 60% in the following month. Purchases are made in the month of production.
* Fixed overhead is $2,000, including $500 depreciation. Overhead costs are paid as incurred.
* Selling costs are $1,500 per month plus $1 per unit sold and are paid in the month incurred.
* Production for January, February, and March was 3,000, 2,000, and 1,200 units, respectively.
* Sales for the 3 months were 1,000, 2,500, and 1,000 units, respectively.
What is the amount of cash disbursements for February?

• A) $13,300
• B) $12,300
• C) $12,800
• D) $ 7,400

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Definitions:

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