Reference no: EM132517601

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months:

January         February            March Material purchases

$12,040            $14,150           $10,970

Question 1: Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $6,500. The budgeted cash payments for materials in January are:

Multiple Choice

Option 1: $6,500.

Option 2: $9,270.

Option 3: $12,520.

Option 4: $13,095.

Option 5: $18,540.