Morrison, Inc. sells a medical device to hospitals nationwide. The price of the device is $300 per unit. Hospitals pay Morrison for their purchases over two months (50% each). Morrison procures the device from a supplier in Asia for $200. The supplier expects immediate payments. Morrison has budgeted the following data for the second quarter of fiscal year 2024: Sales (in units) March (Actual) 1,800 Cash, beginning balance Selling and administrative (including depreciation of $60,000). Required minimum cash balance April May June 2,000 2,500 2,100 $54,000 ? ? $250,000 $250,000 $250,000 $50,000 $50,000 $50,000 Q: The selling and administrative expenses include $60,000 of depreciation. If necessary, the company will borrow cash from a bank through their credit-line arrangement on the first day of each month. Assume that they can borrow in increments of $1,000. The bank requires an interest payment at the end of each month at a monthly rate of 1%, starting from the first month in which the company borrows cash. How much cash does Morrison need to borrow on April 1? Answer: (Click to select)
Morrison, Inc. sells a medical device to hospitals nationwide. The price of the device is $300 per unit. Hospitals pay Morrison for their purchases over two months (50% each). Morrison procures the device from a supplier in Asia for $200. The supplier expects immediate payments. Morrison has budgeted the following data for the second quarter of fiscal year 2024: Sales (in units) March (Actual) 1,800 Cash, beginning balance Selling and administrative (including depreciation of $60,000). Required minimum cash balance April May June 2,000 2,500 2,100 $54,000 ? ? $250,000 $250,000 $250,000 $50,000 $50,000 $50,000 Q: The selling and administrative expenses include $60,000 of depreciation. If necessary, the company will borrow cash from a bank through their credit-line arrangement on the first day of each month. Assume that they can borrow in increments of $1,000. The bank requires an interest payment at the end of each month at a monthly rate of 1%, starting from the first month in which the company borrows cash. How much cash does Morrison need to borrow on April 1? Answer: (Click to select)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Morrison, Inc. sells a medical device to hospitals nationwide. The price of the device is $300 per unit. Hospitals pay Morrison for their
purchases over two months (50% each). Morrison procures the device from a supplier in Asia for $200. The supplier expects
immediate payments.
Morrison has budgeted the following data for the second quarter of fiscal year 2024:
Sales (in units)
March
(Actual)
1,800
Cash, beginning balance
Selling and administrative (including depreciation
of $60,000).
Required minimum cash balance
April
May
June
2,000
2,500
2,100
$54,000
?
?
$250,000
$250,000
$250,000
$50,000
$50,000
$50,000
Q: The selling and administrative expenses include $60,000 of depreciation. If necessary, the company will borrow cash from a bank
through their credit-line arrangement on the first day of each month. Assume that they can borrow in increments of $1,000. The bank
requires an interest payment at the end of each month at a monthly rate of 1%, starting from the first month in which the company
borrows cash. How much cash does Morrison need to borrow on April 1?
Answer: (Click to select)
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