Chaterlain Company Is Preparing Its Budget for the 3^rd Quarter

question 76

Multiple Choice

Chaterlain Company is preparing its budget for the 3^rd quarter. The cash balance on June 30 was $30,000. Additional budgeted data is provided here: $\begin{array}{|l|r|r|r|} \hline&{\text { Jul }} &{\text { Aug }} &{\text { Sep }} \\\hline \text { Cash collections } & \$ 50,000 & \$ 51,000 & \$ 52,000 \\\hline \text { Cash payments: } & & & \\\hline \text { Purchases of inventory } & 20,000 & 19,000 & 18,000 \\\hline \text { Operating expenses } & 25,000 & 21,000 & 32,000 \\\hline \text { Capital expenditures } & 5,000 & 9,000 & 16,000\\\hline\end{array}$ What amount should be shown in the cash budget for the cash balance at the end of July?

• A) $19,100
• B) $30,000
• C) $29,050
• D) $42,200

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Definitions:

ΔTVC/Δq

ΔTVC/Δq represents the change in Total Variable Cost (TVC) resulting from producing one additional unit of output, equivalent to Marginal Cost.

AVC

AVC, or Average Variable Cost, is the total variable costs divided by the quantity of output produced.

MC

Marginal Cost, the increase in total cost that arises from producing one additional unit of a product or service.

Total Variable Cost

Total Variable Cost is the sum of all costs that vary with the level of output produced, such as materials and labor.