Acti Manufacturing Corporation is estimating the following r

Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: September $830,000 October $940,000 November $860,000 December $780,000 At Act, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase. How much cash should Acti expect to pay out for raw material purchases during November?

Solution

Answer: $908000

	November
Payment for:
October purchases ($940000 x 60%)	564000
November purchases ($860000 x 40%)	344000
Expected cash payout for raw material purchases $	908000