The Projections of Direct Materials Purchases That Follow Are for the Sombo

question 70

Multiple Choice

The projections of direct materials purchases that follow are for the Sombo Corporation. $\begin{array}{lrr}&\text { Purchases on account }&\text { Cash Purchases }\\\text { December } & \$ 40,000 & \$ 30,000 \\\text { January } & 60,000 & 20,000 \\\text { February } & 50,000 & 35,000 \\\text { March } & 70,000 & 25,000\end{array}$
The company pays for 60 percent of purchases on account in the month of purchase and 40 percent in the month following the purchase.What is the expected cash payment for direct materials for the month of February?

• A) $52,000
• B) $72,000
• C) $89,000
• D) $95,000

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Definitions:

Direct Materials

Raw materials that are directly traceable and integral to the finished product in the manufacturing process.

Work In Process

This refers to the goods that are in the middle of the manufacturing process but are not yet complete.

Process Cost System

An accounting method used to track production costs for continuous production processes, allocating costs to units of product.

Shampoo Manufacturer

A company that specializes in producing shampoo products, from formulation and blending to packaging and distribution.