Answer:
The correct answer is A.
Explanation:
Giving the following information:
Interest expense= $600,000
Income before income tax expense= 4,200,000
To calculate the interest earned ratio we need to use the following formula:
Times interest earned ratio= earnings before interest and tax/ interest rate
Times interest earned ratio= 4,200,000/600,000= 7
Total needed
Sales 23,000− BI 15,000=8,000
Units should be produced
8,000+ EI 18,000=26,000
Answer and Explanation:
The Preparation of the cash budget is shown below:-
PTO Co.
Cash budget
For the month ended Sept. 30
Particulars Amount
Beginning cash balance $41,000
Add: Cash receipts for sales $258,000
Total cash available $299,000
LesS:
Cash disbursement
Direct Material $97,200
($72,000 × 30%) + ($108,000 × 70%)
Direct labor $30,000
Other expenses $59,000
Accrued Taxes $10,800
Interest on bank loan $1,700
Total Cash disbursement $198,700
Ending cash balance $100,300
Answer: Capital rationing
Explanation:
Capital Rationing occurs when a firm has to ration capital because there's no enough fund to invest in all the attractive projects.
Capital rationing is used by companies in order to limit the number of projects which they'll invest in at a time.
Since Serena has to rank several alternatives for purchasing a new piece of equipment based on the fact that there is constraint with regards to the availability of funds, this is capital rationing.
