The Carlquist Company makes and sells a product called Product K. Each unit of P

Question

The Carlquist Company makes and sells a product called Product K. Each unit of Product K sells for $24 dollars and has a unit variable cost of $18. The company has budgeted the following data for November:

If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of $1,000 and will bear interest at 2% per month. All borrowing will take place at the beginning of the month. The November interest will be paid in cash during November.

The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is:

$56,000

$147,000

$57,000

$148,000

The Carlquist Company makes and sells a product called Product K. Each unit of Product K sells for $24 dollars and has a unit variable cost of $18. The company has budgeted the following data for November:

Explanation / Answer

$57,000 Statement showing computations   Particulars Amount Opening Cash Balance          44,000.00 Cash receipts : Sales    1,737,000.00 Total Cash Available    1,781,000.00 Cash Disbursements    1,706,500.00 Expecting Closing Cash Balance          74,500.00 Desired Cash Balance        130,000.00 Expected Borrowings = 130,000 - 74,500          55,500.00 Interest @2% on 55,500            1,110.00 Total Borrowings to pay intt and Maintain minimum cash balance          56,610.00 Since Borroings are in multiple of 1000 it should be          57,000.00

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