Advance Engineering Makes Payments on Its Inventory Purchases as Follows-30

question 24

Multiple Choice

Advance Engineering makes payments on its inventory purchases as follows-30% in the month of purchase, 50% in the following month, and 20% in the second month following purchase. Budgeted inventory purchases for June, July, and August are $50 000, $43 000 and $56 000, respectively. At what amount are cash payments for inventory in August budgeted?

• A)$40 500
• B)$48 300
• C)$56 000
• D)$51 900

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Definitions:

Variable Costs

Costs that change in proportion to the level of output or activity in a business.

Economic Profits

The surplus remaining after total costs are deducted from total revenue, factoring in both explicit and opportunity costs.

Normal Rate

Refers to the standard, expected rate in financial or economic contexts, often used as a benchmark.

Short Run

The period of time for which two conditions hold: The firm is operating under a fixed scale (fixed factor) of production, and firms can neither enter nor exit an industry.