CraftCo,Inc

question 42

Multiple Choice

CraftCo,Inc.'s projected sales for the first six months of 2012 are given below:

40% of sales are collected in cash at time of sale,50% are collected in the month following the sale,and the remaining 10% are collected in the second month following the sale.Cost of goods sold is 60% of sales.Purchases are made in the month prior to the sales,and payments for purchases are made in the month of the sale.Total other cash expenses are $40,000/month.The company's cash balance as of February 28,2012 will be $25,000.Excess cash will be used to retire short-term borrowing (if any) .CraftCo,Inc.has no short term borrowing as of February 28,2012 Assume that the interest rate on short-term borrowing is 1% per month.The company must have a minimum cash balance of $15,000 at the beginning of each month.What is CraftCo,Inc.'s total cash disbursements for April 2012?

• A) $294,000
• B) $334,000
• C) $374,000
• D) $414,000

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Definitions:

Sample Size

The number of subjects or units included in a sample taken from a population for the purpose of statistical analysis.

Rank-Order

A method of arranging data points based on their relative position or value in ascending or descending order.

α

Represents the level of significance in statistical hypothesis testing, commonly set at 0.05, indicating the probability of rejecting the null hypothesis when it is true.

P Value

The probability of obtaining test results at least as extreme as the observed results, assuming that the null hypothesis is correct.