Acme IncHas Prepared Its Third Quarter Budget and Provided the Following

question 64

Multiple Choice

Acme Inc.has prepared its third quarter budget and provided the following data: The cash balance on June 30 is projected to be $4,000.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.
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How much will the company have to borrow at the end of July?

• A)$0
• B)$5,000
• C)$15,000
• D)$10,000

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Definitions:

Aggregate Plan

A production plan for a medium-term horizon that balances demand and supply, often translating demand forecasts into a production strategy.

Complex Aggregate Planning

Advanced strategies in aggregate planning that deal with the intricacies of matching supply and demand under multiple constraints.

Planning Horizon

describes the time period over which future events are considered for planning and decision-making purposes.

Aggregate Planning

A process in operations management aimed at determining optimal production levels, inventory levels, and workforce levels to meet fluctuating demand over a medium-term horizon.