Finch Company began its operations on March 31 of the current
year. Finch has the following projected costs:
| April | May | June | |
| Manufacturing costs (1) | $156,000 | $195,000 | $205,000 |
| Insurance expense (2) | 1,000 | 1,000 | 1,000 |
| Depreciation expense | 2,140 | 2,140 | 2,140 |
| Property tax expense (3) | 480 | 480 | 480 |
(1) Of the manufacturing costs, three-fourths are paid for in the
month they are incurred; one-fourth is paid in the following
month.
(2) Insurance expense is $1,000 a month; however, the insurance is
paid four times yearly 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 Company expected in the month of June
are
a.$153,750
b.$251,250
c.$202,500
d.$48,750
| Particular | Amount |
| Manufacturing expenses for the month of June, Paid in June ( $205000*3/4) | $153750 |
| Manufacturing expenses for the month of May, Paid in June ($195000*1/4) | $48750 |
| Total Expenses | $202500 |
Option C is the correct answer
Finch Company began its operations on March 31 of the current year. Finch has the following...