Question

I am ONLY looking for help on question 6. Please explain how the answer is (A)

4. Reynold Enterprises sells a single product for $25. The variable expense per unit is $15 and the fixed expense per unit is $5 at the current level of sales. The company's net operating income will increase by $5 if one more unit is sold. True False 5. Which of the following is NOT an objective of the budgeting process? A. To communicate management's plans throughout the entire organization (B.) To ensure that the company continues to grow. C. To uncover potential bottlenecks before they occur. D. To provide a means of allocating resources to those parts of the organization where they can be used most effectively. 6. Given beginning cash of $100, budgeted cash collections of $10 and budgeted expenses of $40 ($10 in depreciation expense on manufacturing equipment and $30 of advertising expenses) and required minimum cash of $100, the company should borrow Assume the company has to borrow in increments of ten dollars. (A. $20 B. $30 C. $40 D. $45 7. A company with high fixed costs will have comparatively high operating leverage and a higher margin of safety True False 8 The salary paid to the maintenance supervisor in a manufacturing plant is an example of

Answer 1

Beginning cash balance	100
Budgeted cash collection	10
Total available cash	110
Advertising expense	-30
Remaining cash balance	80
Minimum cash balance required	100
Hence, borrowing needed ( Minimum cash balance required-Remaining cash balance)	$20

Correct option is A.

Kindly comment if you need further assistance. Thanks‼!