Hammond's Cookie Toppings Makes Payments on Its Inventory Purchases as Follows

question 187

Multiple Choice

Hammond's Cookie Toppings makes payments on its inventory purchases as follows: 25% in the month of purchase, 65% in the following month, and 10% in the second month following purchase. Budgeted inventory purchases for June, July, and August are $15,000, $19,000 and $24,000, respectively. At what amount are cash payments for inventory in August budgeted?

• A)$18,500
• B)$7,850
• C)$5,800
• D)$19,850

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Definitions:

Opportunity Costs

The value of the best alternative forgone when a decision is made to pursue a particular action or investment.

Tangible Costs

Direct costs associated with the production or purchase of a good or service that can be easily quantified.

Value

The importance, worth, or usefulness of something to a person or in the market.

Quality

The degree to which a product or service meets or exceeds customer expectations in terms of reliability, design, functionality, durability, and satisfaction.