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HACTEHA [7]
2 years ago
8

Your Company makes and sells a single product. Each unit sells for $32 dollars and has a unit variable cost of $20. The company

has budgeted the following data for November: * Sales of 46,000 units, all for cash. * A cash balance on November 1 of $45,000. * Cash disbursements during November of $1,460,000. * Deprecation expense $35,000. * A minimum required cash balance on November 30 of $75,000. How much cash must be borrowed to cover all cash disbursements and to obtain the required November 30 cash balance
Business
1 answer:
andre [41]2 years ago
3 0

Answer:

Your Company

The cash that must be borrowed to cover all cash disbursements and to obtain the required November 30 cash balance is:

= $18,000.

Explanation:

a) Data and Calculations:

Selling price per unit = $32

Variable cost per unit = $20

Contribution margin per unit = $12 ($32 - $20)

Beginning cash balance on November 1 = $45,000

Cash disbursements = $1460,000

Depreciation expense = $35,000

Minimum required cash balance on November 30 = $75,000

Budgeted sales units for November = 46,000

Sales revenue (cash) = $1,472,000 (46,000 * $32)

Variable costs =                920,000 (46,000 * $20)

Contribution margin =   $552,000 (46,000 * $12)

Cash Budget

For the month of November

Beginning cash balance    $45,000

Total cash collections =   1,472,000

Cash available                $1,517,000

Cash disbursements      (1,460,000)

Cash balance                     $57,000

Cash to borrow                     18,000 ($75,000 - $57,000)

Minimum cash balance     $75,000

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