Question

In: Accounting

Master Budget Basics

The following information pertains to Hepburn Company.

Month Sales Purchases
January $40000 $22000
February $36000 $20200
March $39600 $22600
  • Cash is collected from customers 20percent in the month of the sale and 80in the month immediately following the sale.
  • 55percent of purchases are paid for in cash in the month of the purchase, and the balance is paid the following month.
  • Labor costs are 16percent of sales. Other operating costs are $35000per month, including $4000of depreciation. These costs are paid in the month incurred.
  • The cash balance on March 1st is $10000.
  • A minimum cash balance of $10000 is required at the end of the month.
  • Money can be borrowed in multiples of $500.

How much cash will be paid in total during March? Do not use any dollar signs or commas in your answer.

Solutions

Expert Solution

The following information pertains to Hepburn Company.

Month Sales Purchases
January $40000 $22000
February $36000 $20200
March $39600 $22600
  • Cash is collected from customers 20percent in the month of the sale and 80in the month immediately following the sale.
  • 55percent of purchases are paid for in cash in the month of the purchase, and the balance is paid the following month.
  • Labor costs are 16percent of sales. Other operating costs are $35000per month, including $4000of depreciation. These costs are paid in the month incurred.
  • The cash balance on March 1st is $10000.
  • A minimum cash balance of $10000 is required at the end of the month.
  • Money can be borrowed in multiples of $500.

How much cash will be paid in total during March? Do not use any dollar signs or commas in your answer.

Explanation in workings:

 


the amount of cash to be paid in total during the month of March will be =$58,856

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