From the following information what is the cash payment to be made in April.Finch Co. began its operating on March 31 of the current year and Finch Co. has the following projected costs....

From the following information what is the cash payment to be made in April.

Finch Co. began its operating on March 31 of the current year and Finch Co. has the following projected costs.

Manufacturing costs(1): April:$156,800; May:$195,200; June:$217,600
Insurance expense(2): April:$1,000; May:$1,000; June:$1,000
Depreciation expense: April:$2,000; May:$2,000; June:$2,000
Property Tax expense(3): April:$500; May:$500; June:$500
(1) 3/4 of the manufacturing costs are paid for the month they are incurred. 1/4 is paid in the following month.
(2) Insurance expense is $1,000 a month however the insurance is paid four times a year in the first month of the quarter, i.e. January, April, July and October.
(3) Property tax is paid once a year in November.
The cash payments for Finch Co. in the month of April are:
A. $122,600
B. $120,600
C. $123,100
D. $121,100

Expert Answers
justaguide eNotes educator| Certified Educator

The information given allows us to calculate the cash payments for the month of April. The company has to pay insurance expenses of $1000 every month and the amount is pound on a quarterly basis. As the insurance payment in due in April, it is for $3000. The company pays 3/4 of the manufacturing expenses in the same month and 1/4 of the amount the next month. As the company has started in March, there are no dues for March to be paid in April. Only 3/4 of the expenses of April have to be paid. This is 156800*(3/4) = $ 117600.

Depreciation is calculated at the end of the month and property tax is paid only once in November.

This gives the expenses to be paid for as $117600 + $3000 = $120,600.

ch1132 | Student

 

Finch Co. began its operating on March 31 of the current year and Finch Co. has the following projected costs.

Manufacturing costs(1): April:$156,800; May:$195,200; June:$217,600
Insurance expense(2): April:$1,000; May:$1,000; June:$1,000
Depreciation expense: April:$2,000; May:$2,000; June:$2,000
Property Tax expense(3): April:$500; May:$500; June:$500
(1) 3/4 of the manufacturing costs are paid for the month they are incurred. 1/4 is paid in the following month.
(2) Insurance expense is $1,000 a month however the insurance is paid four times a year in the first month of the quarter, i.e. January, April, July and October.
(3) Property tax is paid once a year in November.
The cash payments for Finch Co. in the month of May are:
A. $185,600
B. $149,900
C. $187,600
D. $189,100