A3+ Has Prepared Its Third Quarter Budget and Provided the Following

question 101

Multiple Choice

A3+ has prepared its third quarter budget and provided the following data:
$$\begin{array} { | l | l | l | l | } \hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 49,000 & \$ 39,900 & \$ 47,600 \\\hline \text { Cash payments } & & & \\\hline \text { Purchases of inventory } & 29,000 & 21,700 & 17,700 \\\hline \text { Operating expenses } & 12,400 & 9100 & 11,400 \\\hline \text { Capital expenditures } & 13,200 & 24,300 &0 \\\hline\end{array}$$
The cash balance on 30 June is projected to be $4200.The company has to maintain a minimum cash balance of $5,000 and is authorised 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 4%.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.Calculate the final projected cash balance at the end of September.

• A) $21,867
• B) $55,967
• C) $6784
• D) $8367

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Definitions:

Direct Expenses

Expenses directly linked to the creation of certain products or services, including labor and raw materials.

Direct Expense

Expenses that can be directly traced to a specific cost object, such as a product or a department, including materials and labor directly involved in production.

Indirect Expense

Costs that are not directly tied to the production of goods or services, such as utilities, rent, and administrative salaries.

Direct Expense

Costs that can be directly attributed to the production of specific goods or services, such as raw materials and labor.