The Carlquist Company Makes and Sells a Product Called Product $£ 1,152,000$

question 35

Multiple Choice

The Carlquist Company makes and sells a product called Product K. Each unit of Product K sells for £24 and has a unit variable cost of £18. The company has budgeted the following data for November:
If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of £1,000 and will bear interest at 2% per month. All borrowing will take place at the beginning of the month. The November interest will be paid in cash during November.* Sales of $£ 1,152,000$ , all in cash.
*A cash balance on November 1 of $£ 48,000$ .
* Cash dis bursements (other than interest) during November of $£ 1,160,000$ .
*A minimum cash balance on November 30 of $£ 60,000$ .
The amount of cash that must be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is

• A)£20,000.
• B)£21,000.
• C)£37,000.
• D)£38,000.

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Definitions:

Intrinsic Motivation

Wanting to perform an activity for its own sake.

Overjustification Effect

The tendency for intrinsic motivation to diminish for activities that have become associated with rewards.

Social Comparison Theory

A concept that people evaluate their own abilities and opinions by comparing themselves to others.

Introspection

The process by which a person examines the contents of his or her mind and mental states.