Reference no: EM132564317
Question - The following information has been provided by Jared Incorporated:
- Budgeted sales for August and September are $120,000 and $140,000, respectively.
- Budgeted inventory purchases for August and September are $60,000 and $84,000, respectively.
- 30% of purchases are paid for during the month of purchase and the remaining 70% are paid for during the subsequent month.
- 20% of sales are collected during the month of sale and the remaining 80% are collected during the subsequent month.
- Variable operating costs are budgeted at 25% of sales. Fixed operating costs are budgeted at $36,000 monthly and include depreciation expense of $7,000. Operating costs are paid for in the month that they are incurred.
- The cash balance on September 1st was $10,000. Jared's goal is to maintain a $10,000 cash balance.
Jared can borrow cash in increments of $1,000. How much cash is budgeted to be paid in September for operating costs?
A) $71,000
B) $35,000
C) $36,000
D) $64,000