ACCT 2101 EXAM TWO
Four of Wands, LLC generated $255,000 in sales during September 2020. Of this amount, 25% was for cash. The remaining 75% of sales were made on account. The company budgeted $350,000 in sales for October 2020 and expects sales in November 2020 to be 10% higher than October's sales. 20% of the total budgeted sales are for cash; the remaining budgeted sales are expected to be made on account. Historically, 70% of sales on account are collected in the month of sale. 25% of sales on account are collected in the first month following the month of sale. 4% of sales on account are collected in the second month following the month of sale. The remaining 1% is deemed uncollectible. Given the above information, calculate the total expected cash receipts in November. A. $371,650 B. $320,200 C. $370,250 D. $293,250 E. $317,050
$370,250
The Well's Run Dry, LLC manufactures bottled water dispensers for home and office use. Run Dry makes 40,000 units per year of a part it uses in its water dispensers. At an annual activity level of 40,000 units, Run Dry's total product costs are $2,868,000. Of this amount, $984,000 is fixed. The company is considering whether it should outsource production of the part. If the part were purchased from the outside supplier, 90% of the fixed manufacturing overhead cost would continue, and the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional income from this other product would be $349,800 per year. Assume the company will need 45,000 units of the part next year. At what purchase price per unit will the company be economically indifferent between making and buying the part from the outside supplier? A. $57.06 B. $53.30 C. $61.95 D. $56.30 E. $59.22
$57.06
Zen, Inc. is a merchandiser of herbal teas and began operations on January 1. The company expects sales in its first month of operations to total $2,500. All sales will be cash sales. Inventory purchases during January are expected to equal $600. Purchases are paid for in the month following the month of purchase. No purchase discounts are available. Zen's expected monthly operating expenses are $1,750, $500 of which is for depreciation. No timing differences exist between when cash operating expenses are incurred and when they are paid. Zen currently has no debt but does plan to pay a cash dividend of $900 to its owners in January. Zen is required to maintain a minimum cash balance of $1,000 at the end of each month by its bank. How much would Zen need to borrow from an established line of credit in January if it makes no adjustments to the above plan? A. $850 B. $1,250 C. $1,150 D. $650 E. $1,000
$650
Which of the following statements is true regarding the indifference point calculation? A. If sales volume is expected to be higher than the indifferent point, management should choose the cost structure with higher fixed costs. B. If sales volume is expected to be higher than the indifferent point, management should choose the cost structure with higher variable costs.
A. If sales volume is expected to be higher than the indifferent point, management should choose the cost structure with higher fixed costs.
Which of the following is considered when deciding whether to accept a special order? A. Are fixed costs affected? B. Is the special unit contribution margin positive? C. Will regular sales be affected in the long run? D. Is there sufficient excess capacity? E. All of the above are considered
All of the above are considered
Which of the following is a reason why companies should budget? A. To provide an opportunity for managers to focus on long term goals B. To communicate the expectations of management to employees. C. To plan for future operations and resource requirements. D. To provide expectations against which actual operations can be compared. E. All of the above are reasons why companies should budget.
All of the above are reasons why companies should budget.
Which of the following statements concerning budget preparation for a merchandiser is correct? A. An understanding of both cost function and cost behavior is required to prepare an operating expense budget. B. Operating expenses differ from operating cash outflows solely as a result of timing differences between when an expense is incurred and when an expense is paid. C. Assuming only a portion of a company's sales are made on account, bad debt expense under the percentage of sales method is calculated by multiplying total sales by the estimated uncollectible percentage. D. If a company requires its ending inventory to equal a certain percentage of the cost of next month's sales, the company would be able to prepare purchases budgets for 4 months as long as it knew the cost of sales for all 4 months. E. None of the above statements is correct.
An understanding of both cost function and cost behavior is required to prepare an operating expense budget.
Which of the following "rules of thumb" is incorrect with regard to making short-term business decisions? A. Analysis should be performed using a traditional income statement approach. B. Past costs should not be used in the decision making process. C. Per unit fixed costs should be converted to totals for analysis. D. Variable costs should be analyzed on a per unit. E. Qualitative factors should be considered when analyzing a decision.
Analysis should be performed using a traditional income statement approach.
Clarke Central's class of 2001 is currently planning its 20-year class reunion. In estimating costs for the 20-year reunion, the planning committee compiled the number of people in attendance and related total costs for each previous class reunion held. The data was then entered in a spreadsheet program and regression analysis was performed. The analysis resulted in the following cost behavior equation: y=56x+800 and indicated that 95% of the variability in total costs could be explained by the number of people in attendance. Which of the following statements is incorrect if the planning committee's best estimate is that 200 people will attend the 20-year reunion, and the committee expects all costs to be covered by the people in attendance? A. The best estimate of total costs for the 20-year reunion is $12,000 B. The x variable coefficient is 56, and the intercept coefficient is 800. C. Assuming the estimate is realistic, the minimum price that should be charged per person is $56. D. It is unlikely that an outlier exists in the data used to perform the regression analysis. E. If the estimate is correct, the total fixed costs will be $800.
Assuming the estimate is realistic, the minimum price that should be charged per person is $56.
Burning Lotus, Inc., a merchandiser of earth centric products, began operations on January 1. The company expects sales in its first month of operations to total $15,000. All sales will be cash sales. Inventory purchases during January are expected to equal $4,500. Purchases are paid for in the month following the month of purchase. No purchase discounts are available. The company's expected operating expenses are as follows: Salaries and Wages (paid on the last day of each month) $2,500 per month Lease Expense (paid on the 15th day of each month) $1,000 per month Utilities Expense (paid on the 1st day of the following month) $750 per month Depreciation Expense $500 per month Burning Lotus plans to take out a business loan with a local bank at the beginning of January. The entire amount borrowed will be immediately reinvested in the business to purchase assets and inventory. Interest will not begin to accrue until February; however, Burning Lotus is required to make a principal payment of $2,000 at the end of January. Additionally, the company plans to pay a cash dividend of $3,000 to its owners in January. Burning Lotus is required to maintain a minimum cash balance of $7,000 at the end of each month by the bank. Which of the following statement is incorrect? A. Burning Lotus's cash operating expenses paid in January equal $4,750. B. Burning Lotus should anticipate having to pull $500 from an established line of credit if it makes no changes to the above plan. C. Burning Lotus could pay up to $2,500 in cash dividends to its owner during January without dipping below the required minimum cash balance. D. Burning Lotus's expected ending cash balance on January 31st is $6,500. E. Burning Lotus would not budget to make a payment in January to its suppliers for inventory purchases.
Burning Lotus's cash operating expenses paid in January equal $4,750.
For CVP analysis calculations, which of the following statements is incorrect? A. In target profit calculations, sales revenue exceeds total costs. B. A company's sales mix is ultimately determined by the market. C. If sales volume is expected to be higher than the indifference point, management should choose the cost structure with higher fixed costs. D. The break-even point is the point at which operating income is equal to $0. E. CVP analysis relies on our knowledge of cost function to express relationships among costs, sales volume, and profit.
CVP analysis relies on our knowledge of cost function to express relationships among costs, sales volume, and profit.
Pink Blankie, a manufacturer of children's sleep apparel, incurs three different costs, Cloth, Factory Rent, and Factory Utilities, in its manufacturing operations. Per unit costs for each cost type at two different activity levels are as follows: Cloth Factory Rent Factory Utilities 10,000 units $7.50 $5.00 $0.40 20,000 units $7.50 $2.50 $0.30 The cost behavior for each cost listed above is: A. Cloth - Variable; Factory Rent - Fixed; Factory Utilities - Fixed B. Cloth - Fixed; Factory Rent - Mixed; Factory Utilities - Mixed C. Cloth - Mixed; Factory Rent - Variable; Factory Utilities - Fixed D. Cloth - Variable; Factory Rent - Fixed; Factory Utilities - Mixed E. Cloth - Mixed; Factory Rent - Mixed; Factory Utilities - Variable
Cloth - Variable; Factory Rent - Fixed; Factory Utilities - Mixed
Holding all other variables constant, in which of the following situations will the breakeven point decrease? A. Contribution margin decreases. B. Contribution margin percentage increases. C. Fixed expenses increase. D. Variable expenses increase. E. Sales price decreases.
Contribution margin percentage increases.
Who determines a company's sales mix? A. Shareholders B. Management C. Customers
Customers
Which of the following is not a model used to develop a cost behavior formula? A. High-Low B. Account Analysis C. Scatterplot D. Derivative E. Regression
Derivative
CVP analysis relies on our knowledge of cost function to express relationships among costs, sales volume, and profit. True False
False
Cost behavior relates to the categorization of costs as either product or period costs. True False
False
Management should only discuss a course of action if the combined cash budget reveals an expected cash deficit at the end of the period. True False
False
The only criteria necessary to make information relevant to the decision making process is that it differs between alternatives. True False
False
The unit contribution margin is calculated by subtracting the unit fixed cost from the sales price. True False
False
Used properly, budgets can help eliminate goal congruence. True False
False
Which of the following cost behaviors does not change in total? A. Fixed B. Mixed C. Variable
Fixed
Which of the following statements is true with regard to cost behavior? A. Cost behavior relates to the categorization of costs as either product or period costs. B. Variable costs do not change in total as the activity level changes. C. Mixed costs are constant in total. D. Fixed costs, calculated on a per unit basis, are inversely related to the change in activity level. E. The preparation of a traditional income statement requires knowledge of cost behavior.
Fixed costs, calculated on a per unit basis, are inversely related to the change in activity level.
The High School Musical Company has two divisions - Troy and Gabriella. In the previous year, Troy generated sales revenue of $300,000 and had total traceable costs of $80,000, $20,000 of which was fixed. Gabriella generated a segment margin of $30,000. Common fixed costs totaled $170,000; $50,000 of this amount was allocated to the Gabriella division. Management is considering the elimination of the Gabriella division since it has shown an operating loss for the past several years. If Gabriella is dropped, the company would open a new division in its place. The new division would generate $175,000 in sales revenue and have a contribution margin percentage equal to 60%. The new division's traceable fixed costs would total $25,000. In addition, it is projected that opening the new division would increaseTroy's sales volume by 3%. Which of the following statements is correct with regard to the above information? (each statement is independent) A. Troy's contribution margin percentage increases by 3% if Gabriella is dropped and replaced with the new division. B. Total traceable costs for the new division is $25,000. C. The company's operating income will differ depending on if the income statement is prepared using the traditional approach or the contribution margin approach. D. The company's common fixed costs would decrease by $50,000 if Gabriella is dropped. E. If Gabriella is dropped and replaced with the new division, the company's operating income would increase by $57,200.
If Gabriella is dropped and replaced with the new division, the company's operating income would increase by $57,200.
Which of the following is incorrect regarding cost behavior equations? A. If costs are nonlinear, managers can develop cost behavior equations by defining multiple relevant ranges. B. The y-intercept value in a cost behavior equation represents total expected costs when the activity level is zero. C. The account analysis method is considered the most subjective tool available for developing a cost behavior equation. D. If a data set only contains two data points, the high low method and regression analysis will yield different cost behavior equation. E. The relevant range is defined as the range of activity over which a cost behavior equation is valid.
If a data set only contains two data points, the high low method and regression analysis will yield different cost behavior equation.
Reach the Summit, Inc. is planning to open a new rock climbing facility in Athens. Summit will generate revenue by selling monthly memberships that give climbers unlimited access to the facility. The facility will have an estimated $360,000 in assets. The owners expect to earn a 15% annual return on the company's assets. Thefacility's annual fixed costs are estimated to be $12,000. The variable costs per climber are estimated to be $12 per month. After researching the market, the company believes that it can sell 80 memberships in its first month of operations if it does not require an initial signup fee. Summit can only charge $80 per month for a membership because of competition from another facility in the area. Which of the following statements is incorrect regarding the company's first month of operations? A. The total monthly target costs for the company is $1,900. B. If it makes no changes to its projected operations, the company will fall short of its monthly target profit by $1,900. C. If fixed costs are reduced to $940 per month and all other variables remain constant, the company would meet its monthly target profit. D. Holding all other variables constant, if the company reduces variable costs by $0.75 per member, the company would meet its monthly target profit. E. Reach the Summit is considered a price taker in its current market.
If it makes no changes to its projected operations, the company will fall short of its monthly target profit by $1,900.
Hawkins Audio Video, Inc. manufactures digital cameras. Hawkins is considering whether it should outsource production of a part used in the manufacturing of its cameras. 50,000 units of the part were made by Hawkins last year. At this production level, the company incurred the following direct product costs: Direct Materials $250,000 Direct Labor $104,000 Manufacturing Overhead incurred during the same period for production of the part is represented by the following cost behavior equation: y = $0.10x + $50,000. If the part were purchased from an outside supplier, 25% of the total fixed manufacturing overhead cost would be eliminated, and the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional income from this other product would be $12,500 per year. A supplier has been identified who can sell the part to Hawkins at a price of $7.80 per unit. Which of the following statements is incorrect assuming 60,000 units of the part will be needed next year? A. At a purchase price of $7.80, the cost to make is less than the cost to buy. B. If production is outsourced, operating income will decrease by $6,000. C. The total cost to make the part next year is $480,800. D. Qualitative considerations, such as whether the purchased part is of equal quality to its manufactured part, should be considered by Hawkins. E. At a purchase price of $7.60 (rounded), Hawkins would be indifferent between making and buying the part.
If production is outsourced, operating income will decrease by $6,000.
San Luis Obispo, California based SLOboards, Inc. manufactures a single line of paddleboards. For the year ended December 31, 2019, SLOboards manufactured and sold a total of 1,000 boards. The following information was compiled for 2019: Sales Revenue . . . $500,000 Total Variable Costs . . . $150,000 Total Fixed Costs . . . $160,000 SLOboards is considering relocating its operations to Morro Bay, California in 2021. If the company relocates to Morro Bay, the sales price will not change. The variable cost per board in Morro Bay will decrease by $50, but the total annual fixed manufacturing costs will increase by $45,000. Which of the following statements isincorrect? A. The San Luis Obispo cost structure is considered the low operating leverage option for SLOboards' operations. B. SLOboards' 2019 operating income was $190,000. C. If operations are moved to Morro Bay, the annual breakeven point would be 55 units higher than the annual breakeven point in San Luis Obispo. D. If annual unit sales in 2021 are expected to be greater than 900, the company should move its operations to Morro Bay. E. If the company relocates to Morro Bay and desires a $195,000 annual target profit, it must generate sales revenue of $400,000 in 2021.
If the company relocates to Morro Bay and desires a $195,000 annual target profit, it must generate sales revenue of $400,000 in 2021.
I Put That Ish on Everything, Inc. manufactures a line of premium hot sauces. The company's managers would like to increase the annual operating income generated from its best selling sauce Hot Mama by $4,800. The product's sales staff is doubtful that the current customer base would accept a price increase. However, they are confident that the product's customer base can be expanded without incurring any additional costs. Management has concluded after consulting with key members of the product's manufacturing and sales teams that all costs for the product line are currently at the lowest level possible.The following data has been prepared for the Hot Mama product line: Sales Price . . . $8.50 Unit Variable Cost . . . $3.25 Unit Traceable Fixed Cost (at current annual sales volume) . . . $1.50 Current Annual Sales Volume . . . 7,200 units Given all of the above information, which of the following scenarios would you recommend to management to achieve their goal of increasing operating income for the Hot Mama line? Assume an annual relevant range of 10,000 units of Hot Mama. A. Increase sales price to $9.17. No change in sales volume, unit variable costs, or total fixed costs. B. Decrease unit variable cost by $0.67. No change in sales price, sales volume, or total fixed costs. C. Decrease total fixed costs by $4,800. No change in sales price, sales volume, or unit variable costs. D. Increase annual sales volume by 915 units. No change in sales price or costs. E. I would recommend more than one of the above scenarios.
Increase annual sales volume by 915 units. No change in sales price or costs.
Which of the following is a disadvantage of participative budgeting? A. Increased motivation of management. B. Increased likelihood of budgetary slack. Your answer is correct. C. Increased accuracy of budget.
Increased likelihood of budgetary slack.
Which of the following is not an assumption made during CVP analysis? A. Sales mix remains constant. B. Costs can be classified according to cost behavior. C. Revenue is linear throughout the relevant range. D. Inventory levels fluctuate.
Inventory levels fluctuate
Which of the following is not a typical budgeting approach used by companies? A. Rolling B. Prior period review C. Master D. Zero based
Master
Which of the following statements is incorrect concerning budget preparation? A. If a participative approach is used to prepare budgets, multiple levels of management are involved in the budgeting process. B. The preparation of the sales budget is the starting point in the budgeting process for all companies. C. Participative budgeting decreases the risk that employees will create budgetary slack. D. The advantage of the rolling budget approach is that it keeps management focused on their operational and strategic goals. E. A zero-based budgeting approach requires that all budgeted amounts be "justified" during the budgeting process.
Participative budgeting decreases the risk that employees will create budgetary slack.
Which of the following statements is true with regard to short-term decision-making? A. Fixed costs should be considered on a per unit basis. B. Variable costs should be considered in total. C. Qualitative and quantitative information should be considered.
Qualitative and quantitative information should be considered.
Which of the following questions best describes a keep/drop decision? A. Should we continue to operate the segment? B. In what order should we fill demand? C. Should we continue making the part in house? D. Should we accept a one time, large volume order at a reduced sales price? E. What should we charge for our product?
Should we continue to operate the segment?
What Was All That One in a Million Talk, Inc., a manufacturer of model cross country mopeds, incurred the following per unit costs in its monthly operations: Month Activity Level Cost Per Moped June 100 mopeds $100.00 July 85 mopeds $112.00 August 80 mopeds $93.75 September 75 mopeds $105.00 Assuming the relevant range extends to 1,560 mopeds per year and the above data set does not contain an outlier which of the following statements is correct? (The company uses the high low method to develop cost behavior equations.) A. The annual fixed costs are expected to be $18,000. B. For each additional moped manufactured, costs are expected to increase by $102.14. C. The manufacturing costs are variable costs because the per unit amount changes with the activity level. D. If 1,500 mopeds are expected to be produced in a given year, the estimated total annual costs would be $129,000. E. More than one of the above statements is correct.
The annual fixed costs are expected to be $18,000.
Which of the following statements is correct regarding contribution margin? A. The total contribution margin tells managers the amount by which sales revenue exceeds cost of goods sold. B. Companies that sell more than one product can disregard sales mix when performing CVP analysis. C. The unit contribution margin is calculated by subtracting the unit fixed cost from the sales price. D. The variable cost percentage represents the amount from each unit sale that covers variable costs. E. The contribution margin income statement is organized by cost behavior.
The contribution margin income statement is organized by cost behavior.
Which of the following is correct with regard to short-term decision making? A. The effect on current and future customer relationships should be considered when deciding whether to accept or reject a special order. B. If a company has sufficient excess capacity to fully fill a special order, the company will need to give up regular sales if they accept the special order. C. When a manufacturer outsources production of a part used in its production process, the manufacturer will typically eliminate all fixed manufacturing costs. D. In a keep/drop decision, if all of a company's fixed costs are common, a segment's segment margin will be less than its contribution margin E. A company having few competitors would typically use target costing in its pricing approach.
The effect on current and future customer relationships should be considered when deciding whether to accept or reject a special order.
Which of the following statements best describes the break-even point? A. The point at which variable costs equal fixed costs. B. The point at which sales revenue equals contribution margin. C. The point at which operating income is equal to $0.
The point at which operating income is equal to $0.
Which of the following budgets is the starting point in the budgeting process for all companies? A. The sales budget. B. The purchases budget. C. The operating expenses budget. D. The capital expenditures budget.
The sales budget
It's Five O'clock Somewhere, LLC manufactures beverage containers. The company is anxious to produce and sell a new beverage container designed to keep beverages cool for up to 2 hours. The container will sell for $3 each. Enough capacity exists in the company's plant to produce 14,000 of the new containers each month. $0.40 from every sales dollar is contribution margin. Fixed costs associated with the container would total $14,400 per month in the existing facility. The company's Marketing Department predicts that if demand for the new container exceeds the 14,000 containers that the company is able to produce in its current facility that additional manufacturing space can be rented from another company at a fixed cost of $2,000 per month. The rented facility has a production capacity of10,000 units per month. The variable cost percentage in the rented facility would equal 65% due to somewhat less efficient operations than in the company's current facility. Which of the following statements is incorrect? A. Even if the company produces less than 14,000 containers in its current facility, the total fixed costs will remain at $14,400. B. The monthly breakeven point in the existing facility is greater than the monthly breakeven point in the rented facility. C. The maximum monthly operating income that the company could make with the two facilities is $10,900. D. To make a monthly target profit of $5,000, a total of 20,381 containers must be produced and sold. E. As long as the company's monthly target profit is less than or equal to $2,400, it will not need to rent the additional facility.
To make a monthly target profit of $5,000, a total of 20,381 containers must be produced and sold.
Meditate to Elevate is a wholesaler of gear to yoga studios. The company sells three product lines: Ujjayi, Drishti, and Tapas. A traditional departmental income statement for the quarter ended 9.30.19 is shown below: Ujjayi Drishti Tapas Sales Revenue $25,000 $20,000 $15,000 (Cost of Goods Sold) (15,000) (9,000) (13,500) Gross Profit 10,000 11,000 1,500 (Operating Expenses) (7,500) (5,000) (2,250) Operating Income $2,500 $6,000 $(750) 35% of the cost of goods sold for each product line is variable. The remaining cost of goods sold consists of traceable fixed costs. Operating expenses include $6,000 common fixed costs that have been allocated to each department as follows: $2,500 to Ujjayi, $2,000 to Drishti, and $1,500 to Tapas. The remaining operating expenses consist of variable costs. Which of the following statements is correct with regard to the above information? (each statement is independent) A. The company's common fixed costs would decrease by $1,500 if Tapas is dropped. B. Ujjayi's contribution margin percentage is 20%. C. Total traceable costs for Drishti equal $12,000. D. Operating income using the segmented income statement format would be $13,750. E. If Tapas is dropped, the company's operating income would increase by $750.
Total traceable costs for Drishti equal $12,000.
A company having few competitors would typically use cost-plus pricing to determine its regular sales price. True False
True
In a given period, budgeted purchases are not necessarily the same as budgeted cash payments to suppliers. True False
True
Participative budgeting relies on the knowledge of multiple levels of management within a company. True False
True
Sensitivity analysis helps management answer "What If?" questions. True False
True
The contribution margin income statement is organized by cost behavior. True False
True
The relevant range is defined as the range of activity over which a cost behavior formula is considered valid. True False
True
When making an outsourcing decision, management must consider how the in house unit variable costs compare to the price that will be paid to the outsideprovider/supplier. True False
True
Which of the following questions does the cash collections budget answer? A. What is the company's expected cash balance at the end of the period? B. What are the company's expected cash outflows for the period? C. What are the company's expected cash inflows for the period?
What are the company's expected cash inflows for the period?
The total contribution margin tells managers A. the amount by which sales revenue exceeds variable costs. B. the amount by which sales revenue exceeds cost of goods sold.
the amount by which sales revenue exceeds variable costs.
You own a 500-unit apartment complex and charge a monthly rental rate of $1,100 per unit. When the apartments are 80% occupied, monthly operating costs total $200,000, $120,000 of which are variable costs. A nearby manufacturing plant has just announced that it is expanding and adding additional jobs in the upcoming year. As a result, you anticipate occupancy will increase to 95%. Using your knowledge of cost behavior, what is your predicted monthly operating income? A. $222,500 B. $307,500 C. $300,000 D. $285,000 E. None of the above.
$300,000
#meta manufactures yoga props such as straps and blocks. Straps are sold to customers at a price of $18 per strap. The company currently produces 63,000 straps ayear, which is 90% of full capacity. At the current operating level, the cost of producing and selling a single strap is as follows: Variable Product Costs $3.10 Fixed Product Costs $1.20 Variable Period Costs $0.70 Fixed Period Costs $0.45 An order has been received from a chain of yoga studios for 7,500 straps at a special price of $15 per strap. If the special order is accepted, the unit variable manufacturing costs will decrease by $0.20 per strap due the type of buckles used. A different supplier will be used for the buckles and therefore a new supplier contract has to be drafted by the company's outside attorney. The attorney's fee is estimated to be $1,000. Variable period costs consist solely of sales commissions, which will not be paid on the special order. Fixed period costs will not be affected by acceptance of the special order. By how much will operating income increase if the special order is accepted? A. $72,710 B. $82,650 C. $74,400 D. $77,400 E. $79,650
$82,650
Wake Me Up is a wholesaler of coffee makers. In the current year, actual September sales revenue totaled $200,000 and the cost of sales was $80,000. October sales are expected to increase 10% above September sales. November sales are expected to increase 10% above October sales. December sales are expected to be $200,000. Prices are set to achieve a 60% gross profit. The company wants to maintain an ending merchandise inventory equal to 15% of the next month's cost of sales. The ending inventory requirement was met at the end of September. Accounts Payable consist solely of inventory purchases. Purchases from suppliers carry payment terms of net 30. What is Wake Me Up's expected cash disbursement in November to its supplier? A. $89,320 B. $102,520 C. $108,800 D. $91,300 E. $94,280
$89,320
