The following information has been provided by Zeppelin Corporation: · Budgeted sa
The following information has been provided by Zeppelin Corporation:
· Budgeted sales for January and February are $240,000 and $280,000, respectively.
· Budgeted inventory purchases for January and February are $120,000 and $168,000, respectively.
· 40% of purchases are paid for during the month of purchase and the remaining 60% are paid for
during the subsequent month.
· 10% of sales are collected during the month of sale and the remaining 90% are collected during
the subsequent month.
· Variable operating costs are budgeted at 25% of sales. Fixed operating costs are budgeted at
$72,000 monthly and include depreciation expense of $14,000. Operating costs are paid for in the
month that they are incurred.
· The cash balance on February 1st was $20,000. Zeppelin's goal is to maintain at least a $20,000
cash balance. Zeppelin can borrow cash in increments of $1,000.
How much cash is budgeted to be paid in February for operating costs?
A) $132,000 B) $118,000 C) $142,000 D) $128,000
