Reference no: EM132567709

Problem 1: Winthrop Merchandising is preparing its budget for 2011 (its first year of operation). Sales for the year are budgeted at $1,500,000; 20% are cash sales and 80% are credit sales. The company expects to collect 60% of all credit sales in 2011. Budgeted expenses are $1,200,000. These expenditures include $37,500 for depreciation and $745,500 for variable manufacturing overhead.

Given the information above, total cash outflows for 2011 would be:

Option 1: $417,000

Option 2: $1,200,000

Option 3: $1,162,500

Option 4: $454,500

Problem 2: Winthrop Merchandising is preparing its budget for 2011 (its first year of operation). Sales for the year are budgeted at $1,500,000; 20% are cash sales and 80% are credit sales. The company expects to collect 60% of all credit sales in 2011. Budgeted expenses are $1,200,000. These expenditures include $37,500 for depreciation and $745,500 for variable manufacturing overhead.

for the desired ending cash balance is $45,000, how much must Winthrop borrow during the year?

Option 1: $225,000

Option 2: $142,500

Option 3: $180,000

Option 4: $187,500