Answer the following question(s) using the information below.
The following information pertains to Tiffany Company:
Cash is collected from customers in the following manner:
- Month of sale 30%
- Month following the sale 70%
40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
Labour costs are 20% of sales. Other operating costs are $15,000 per month (including $4,000 of depreciation) . Both of these are paid in the month incurred. The cash balance on March 1 is $4,000. A minimum cash balance of $3,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.
-How much cash will be paid to suppliers in March?
A) $23,200
B) $28,000
C) $44,000
D) $24,800
E) $17,600
Correct Answer:
Verified
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