Question

2 pounds of raw materials per unit. Partial information to November Buated Production (m October ) Hudgeted 45.000 materials purchase pounds) 94.000 102,000 The company plans that raw materials inventory at the end of each month equals 20% of the needs December 35.000 2.000 onth equals 20% of the best quarter's production I raw materials at the beginning of Ostributed 18.000 pounds, November's bude 18.000 pounds, November's budgeted production must be 65.000 units 51.000 units 35.000 units 55.000 units None of the above E 2 Knox, Inc. is planning to end January with a cash balance of $36.000 and no outstanding debt. For February, Budva cash receipts total $110,000 and budgeted cash disbursements total $120.000. The company has an arrangement with its bank to borrow any amount on the first of any month, but the bank requires cash payment of 1% monthly interest on the outstanding borrowing at the end of each month. Knox is heading into its busy season and would like to build its cash reserves. If the company desires a February minimum ending cash balance of $60,000, to the nearest dollar, the minimum amount they would need to borrow at beginning of the month is closest to be: A. $ 14,000 B. $ 33,664 C. $ 34,344 D. $ 70,708 E. None of the above

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

A B C D E G H Answer 2 Part 1) m 4 The correct answer is D) 55000 units UI 7 November purchases = desired ending inventory +required for production - opening inventory 102000 = (35000*2*.2) + (budgetd production *2) - (20%"(budgeted production*2) 102000-14000 = 80%(budgeted production*2) L0 88000/80% = budgeted production *2 _1 110000/2 = budgeted production 2 55000 units 4 Part 2) 5 The correct answer is C) $ 34344 -7 Cash to be borrowed = (desired ending cash balance+cash disbursements-cash receipts-opening balance)/(1-interest) 8 = (60000+120000-110000-36000)/(1-1%) 9 = $34344 -1 Thus the correct answer is $34344