Big Red's Purchases from Suppliers in a Quarter Are Equal

question 104

Multiple Choice

Big Red's purchases from suppliers in a quarter are equal to 71 percent of the next quarter's forecast sales.The payables period is 60 days; other expenses are paid when incurred Wages, taxes, and other expenses are 24 percent of sales, and interest and dividends are $40 per quarter.No capital expenditures are planned.Projected quarterly sales, starting with Q1, are $1,520, $1,580, $1,630, and $1,590, respectively.Sales for the first quarter of the following year are projected at $1,540.What is the amount of the total disbursements for Q2?

• A)$1,564
• B)$1,520
• C)$1,601
• D)$1,538
• E)$1,553

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Definitions:

Machine Hours

The total number of hours that machinery is in operation during a particular period.

Mixing Department

A specific section within a manufacturing process where ingredients or components are combined to produce a final product.

Overhead Costs

The indirect costs or expenses of running a business that are not directly tied to the production of goods or services, such as rent, utilities, and office supplies.

Plantwide Overhead Rate

A single overhead absorption rate calculated to allocate all manufacturing overhead costs uniformly across all products.