Kohlman Company began its operations on March 31 of the current year. Projected manufacturing costs for...

Kohlman Company began its operations on March 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on March 31, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred with the balance to be paid in the following month.
The cash payments for manufacturing in the month of April are:
a.$128,000.
b.$117,600.
c.$156,800.
d.$96,000.

Solutions

Expert Solution

The cash payments for manufacturing cost in the month of April are is as follows:

	April ($)
3/4 of remaining manufacturing costs are expected to be paid in the month in which they are incurred ($156,800 - $28,800)* 3/4	$96,000
1/4 manufacturing costs are expected to be paid in following Month	$0

Total cash payments for manufacturing cost	$96,000

Note: The business operation is started in Mach 31, so there is no manufactured cost is given in the March and therefore, there is no (1/4) manufacturing cost is calculated which is payable in following month that is in April.

So correct answer is option (d) or $96,000

ekkarill92 answered 1 year ago

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