Question

Quagmire Inc. has prepared the following sales budget for the quarter of April, May and June:

Sales Budget
	April	May	June	Total
Sales in units	15600	19800	17400	52800
Selling price per unit	x $30	x $30	x $30
Sales revenue	$468000	$594000	$522000	$1584000

All of the sales are on credit.
Quagmire collects from customers as follows:

40% of sales in the month of sale
25% in the month following the sale, and
35% in the second month following the sale.

Cash receipts budget
	April	May	June	Total
Collect from current sales	187200	237600	208800	633600
Collect from last month	135000	117000	148500	400500
Collect from 2 mos. Prior	176400	189000	163800	529200
Cash receipts	$ 498600	$ 543600	$ 521100	$ 1563300

Quagmire expects cost of goods sold to be 60% of sales.
They keep 10% of next months expected cost of goods sold in ending inventory. Below are budgeted purchases of inventory.
All purchases are paid for in the SAME month as the purchase.

Purchases Budget
	April	May	June	Total
Budgeted cost of goods sold	280800	356400	313200	950400
plus desired ending inventory	35640	31320	25920	25920
Total needs	316440	387720	339120	976320
less beginning inventory	(28080)	(35640)	(31320)	(28080)
Cost of purchases	288360	352080	307800	948240

Below is the budget for variable and fixed selling and administrative expenses.
Selling and admin expenses are paid in the month AFTER they are incurred.
Fixed expenses include depreciation of 21600 each month.

Sales and Admin Budget
	April	May	June	Total
Variable S&A expenses	93600	118800	104400	316800
Fixed S&A (including depreciation)	216000	216000	216000	648000

How much will Quagmire pay (in cash) for purchases in June?   

How much does Quagmire pay for variable S&A expenses in May?   

How much does Quagmire pay for fixed S&A expenses in May?  

Answer 1

How much will Quagmire pay (in cash) for purchases in June?   

307,800 (as purchases are paid in the same month as the purchases)

How much does Quagmire pay for variable S&A expenses in May?   

93,600 (As selling and admistrative expenses are paid in the month after they are incurred)

How much does Quagmire pay for fixed S&A expenses in May?  

194,400 (216,000-21,600) (As selling and admistrative expenses are paid in the month after they are incurred)