Campz Company Began Operations on January 1 of the Current

question 26

Multiple Choice

Campz Company began operations on January 1 of the current year with a $20,000 cash balance. Fifty percent of sales are collected in the month of sale; 50% are collected in the month following sale. Similarly, 25% of purchases are paid in the month of purchase, and 75% are paid in the month following purchase. The following data apply to January and February: $\begin{array} { l r r } & \text { January } & \text { February } \\\text { Sales } & \$ 50,000 & \$ 50,000 \\\text { Purchases } & 20,000 & 25,000 \\\text { Operating expenses } & 5,000 & 7,000\end{array}$ If operating expenses are paid in the month incurred and are inclusive of monthly depreciation charges of $2,500, determine the Campz's cash balance at the end of February.

• A)$64,250
• B)$61,750.
• C)$69,750.
• D)$89,500.
• E)$95,000.

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Definitions:

Units Produced

The total quantity of finished goods a company manufactures in a specific period.

Fixed Component

A cost or portion of cost that remains unchanged regardless of the level of output or activity.

Least-Squares Regression

A statistical method used to determine the line of best fit by minimizing the sum of the squares of the differences between observed and predicted values.

Lubrication Cost

Expenses associated with the lubrication of machinery and equipment to ensure smooth operation and reduce wear and tear.