9. Southland Company is preparing a cash budget for August. The company has $18,

Question

9. Southland Company is preparing a cash budget for August. The company has $18,200 cash at the beginning of August and anticipates $123,200 in cash receipts and $136,900 in cash disbursements during August. Southland Company wants to maintain a minimum cash balance of $10,000. To maintain the minimum cash balance of $10,000, the company must borrow:

Multiple Choice

$0.

$10,000.

$5,500.

$8,200.

$28,200.

16. Alliance Company's budgets production of 28,000 units in January and 32,000 units in the February. Each finished unit requires 3 pounds of raw material K that costs $2.00 per pound. Each month's ending raw materials inventory should equal 40% of the following month's budgeted materials. The January 1 inventory for this material is 33,600 pounds. What is the budgeted materials need in pounds for January?

Multiple Choice

88,800 pounds.

84,000 pounds.

50,400 pounds.

122,400 pounds.

72,000 pounds.

Explanation / Answer

9. The answer is "$5,500"

Cash available at end of month

= 18,200 + 123,200 - 136,900 = $4,500

The company must borrow = 10,000 - 4,500 = $5,500

16. The answer is "88,800 pounds"

Opening inventory = 33,600 pounds

Ending inventory = 32,000 x 3 x 40% = 38,400 pounds

Materials required for January = 28,000 x 3 = 84,000 pounds

Budgeted materials need in pounds for January

= (84,000 + 38,400) - 33,600 = 88,800 pounds

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