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

question 152

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) $51,900
• D) $56,000

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Definitions:

Long-Run Equilibrium

A state in which all factors of production are used efficiently, market supply and demand are balanced, and there is no tendency for change in the economic variables.

Expansionary Gap

A situation where the actual output in an economy exceeds the potential output due to high demand, often leading to inflationary pressures.

Short-Run Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a short time period, given the current level of prices.