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Catano Corporation pays for 40% of its raw materials purchases in the month of purchase and 60% in the following month. If the budgeted cost of raw materials purchases in July is $256,550 and in August is $278,050, then in August the total budgeted cash disbursements for raw materials purchases is closest to:

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Answer:

Total cash disbursement= $271,150

Explanation:

Giving the following information:

Direct material purchase:

July= $256,550

August= $278,050

Catano Corporation pays for 40% of its raw materials purchases in the month of purchase and 60% in the following month.

To calculate the cash disbursements for August, we need to use the following structure:

Cash disbursement August:

Purchase in cash from August= 278,050*0.4= 111,220

Purchase in account from July= 256,550*0.6= 159,930

Total cash disbursement= $271,150

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