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The Carlquist Company makes and sells a product called Product K. Each unit of Product K sells for $32 dollars and has a unit variable cost of $26. The company has budgeted the following data for November:
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Sales of $1,724,000, all in cash.
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A cash balance on November 1 of $52,000.
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Cash disbursements (other than interest) during November of $1,735,300.
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A minimum cash balance on November 30 of $93,000.
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If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of $1,000 and will bear interest at 2% per month. All borrowing will take place at the beginning of the month. The November interest will be paid in cash during November.
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The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is:
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