Posted: April 26th, 2016

# What are total cash disbursements expected for the first quarter of 2008?

In December of 2007, Jones Inc. was formed as a corporation. The company plans to start its operations in early January of 2008. They have the following purchases budgeted for the first quarter of 2008:

January \$600,000
February 500,000
March 300,000

Jones has worked out agreements with its various suppliers to pay for one-fourth of a month’s purchases each month, beginning in the month of purchase, until the purchases are paid in full. No purchases were made prior to January.

What are total cash disbursements expected for the first quarter of 2008?
A. \$425,000.
B. \$625,000.
C. \$775,000
D. \$350,000.

Sampson Apparel Inc. incurred actual variable overhead expenses of \$62,000 in the current year for the production of 10,000 units. Variable overhead was applied at a rate of \$2.00 per direct labor hour and 3 direct labor hours were budgeted for each unit. The company used 29,000 direct labor hours for production. What was Sampson’s variable overhead spending variance?
A. \$4,000 U
B. \$4,000 F.
C. \$2,000 U.
D. \$2,000 F.

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