Dalton Industries Makes All Purchases on Account, Subject to the Following

question 8

Multiple Choice

Dalton Industries makes all purchases on account, subject to the following payment pattern:
Paid in the month of purchase: 30%
Paid in the first month following purchase: 60%
Paid in the second month following purchase: 10%
If purchases for January, February, and March were $200,000, $180,000, and $230,000, respectively, what were the firm's budgeted payments in March?

• A) $69,000.
• B) $138,000.
• C) $177,000.
• D) $197,000.
• E) None of the answers is correct.

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Definitions:

Job-Order Costing System

A cost accounting system that assigns manufacturing costs to a specific product or batches of products, often used in customized production environments.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products or job orders based on a selected activity base, such as direct labor hours.

Variable Manufacturing Overhead

Costs in manufacturing that vary with the level of production output, such as utilities for machinery.

Fixed Manufacturing Overhead

The set of costs associated with the production process that do not change with the level of production, including rent, salaries, and insurance.