Landon Inc. is preparing its cash budget. The sales budget specifies the following budgeted monthly sales, in units:
April .......................................... 9,000
May .......................................... 10,000
June .......................................... 12,000
July .......................................... 11,000
The company's inventory policy is to budget for finished goods inventory equal to 20% of the following month's sales, and to budget for materials inventory equal to 40% of the following month's production requirements. Each unit of finished goods requires three pieces of material at a predicted price of $20 each. Management intends to take advantage of a 2/10, n/30 discount.
Required:
Compute the budgeted cash disbursements during May for payment of accounts payable for material purchases. Assume material purchases are made evenly throughout the month.