Question

NEED THIS ANSWER ASAP!!!!

8 Desdemona O. Corporation makes and sells tasty burritos for $8 per unit with a unit variable cost of $6. All sales are for cash and the variable costs are paid immediately. The company has budgeted the following data for March: Sales 22790 units Cash, beginning balance $34000 Selling and administrative (of which depreciation, $5,000) $53000 Required minimum cash balance $68370 02:01:13 If necessary, the company will borrow cash from a bank on the first day of March. Assume that the borrowing can be made in any (exact) amount, but bears interest at 3% per month. The March interest will be paid during subsequent months. Q) What is the closest amount of cash that must be borrowed on March 1 to cover all cash disbursements and to obtain the desired March 31 cash balance? A) $

Answer 1

Opening Balance of Cash	$         34,000.00
Add: Budgeted Collections
Budgeted collections from sales (22,790 units @ $8)	$ 182,320.00
Cash available during the month	$ 216,320.00
Less: Budgeted Cash Disbursements
Budgeted payments for Variable cost of goods (22,790 units @ $6)	$ 136,740.00
Budgeted selling and admin expenses ($53,000 - $5,000)*	$         48,000.00
Cash available at the end of month before loan	$         31,580.00
Minimum required Closing Balance	$         68,370.00
Cash to be borrowed ($68,370 - $31,580)	$         36,790.00

*Depreciation is a non cash expense and is therefore not considered.