Use the Information Below to Answer the Following Question(s)

question 51

Multiple Choice

Use the information below to answer the following question(s) .
The following information pertains to Hepburn Company:

Cash is collected from customers in the following manner:
- Month of sale 30%
- Month following the sale 70%
40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
Labour costs are 20% of sales. Other operating costs are $30,000 per month (including $8,000 of depreciation) . Both of these are paid in the month incurred. The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.
-How much cash will be disbursed in total in March?

• A) $88,400
• B) $68,400
• C) $96,400
• D) $91,600

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Definitions:

Merchandise

Goods or products that are bought and sold in business.

Commission

A fee paid for services, usually a percentage of the total cost, to an agent or employee for facilitating a sale or other transaction.

Commission-only Basis

A compensation structure where earnings are solely made from commissions without a base salary.

Monthly Sales

The total revenue generated from sales activities within a specific month, often used to measure business performance.