Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.The ending finished goods inventory equals 30% of the following month's sales.The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $4.00 per pound.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000.If the budgeted cost of raw materials purchases in February is $222,180, then the budgeted accounts payable balance at the end of February is closest to:

A) $222,180
B) $88,872
C) $117,912
D) $133,308

Question

Moses Glitch · Accepted Answer

Final Answer : D, Explanation :  The budgeted accounts payable balance at the end of February includes payments for raw materials purchased in February and January. For February, 40% is paid in the same month, so 60% is carried over to March. The cost of raw materials purchases in February is $222,180, so the amount carried over is 60% of $222,180 = $133,308. There's no need to consider January's purchases since the question specifically asks for the end of February's balance, and the calculation provided directly leads to the correct answer.

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