What are the components needed to calculate the total cash payments for the month of November?
The components needed to calculate the total cash payments for the month of November include Materials Cost, Labour Expense, Depreciation Expense, and Taxes.
Materials Cost:
Materials cost is 25% of sales and is purchased and received each month in an amount sufficient to cover the following month's expected sales. In November, the expected sales amount is $80,421. Therefore, the materials cost for November would be 25% of $80,421, which equals $20,105.25.
Labour Expense:
Labour expense is 30% of sales and is paid for in the month it occurred. For November, the labour expense would be 30% of $80,421, which equals $24,126.30.
Depreciation Expense:
Depreciation expense is a fixed amount of $3,600 per month. The depreciation expense for November would be $3,600.
Taxes:
Taxes of $2,600 will be paid in November.
By adding up the expenses:
Materials cost: $20,105.25
Labour expense: $24,126.30
Depreciation expense: $3,600
Taxes: $2,600
Total cash payments for November: $20,105.25 + $24,126.30 + $3,600 + $2,600 = $50,431.55. Therefore, the total cash payments for the month of November will be $50,431.55.