Fuson Corporation Makes One Product and Has Provided the Following

question 204

Multiple Choice

Fuson Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:
Credit sales are collected:
30% in the month of the sale
70% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs.
-If the budgeted cost of raw materials purchases in October is $116,772 and in November is $129,120,then in November the total budgeted cash disbursements for raw materials purchases is closest to:

• A) $81,740
• B) $90,384
• C) $38,736
• D) $120,476

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Definitions:

Net Cash

The amount of cash available after accounting for cash inflows and outflows over a particular period.

Operating Activities

Activities directly related to the primary business operations, including the production, distribution, and sale of goods or services.

Free Cash Flow

A measure that assesses a company’s ability to fund its capital expenditures and dividends from its net cash provided by operating activities.

Generated Enough Cash

Refers to a situation where a business's operations have produced sufficient cash flow to cover its expenses and investment activities.