Home Health manufactures medical supplies. For the month of April, it projects the following selling and administrative expenses: sales commissions, 8% of sales; shipping expense, $12,800; advertising and marketing costs payable next month, $4,200; electric and water utilities, $1,900; equipment depreciation, $18,700; bad debt expense, $3,000. Sales for the month of April equal $694,000. What is the total of cash costs that will be reported on the cash budget?

A $597,880 B $96,120

This is correct answer : C $70,220

D $623,780

Noncash items (equipment depreciation, bad debt expense, and advertising and marketing costs payable next month) are not reported on the cash budget. Sales commissions = 0.08 x $694,000 = $55,520. Transfer to cash budget = $55,520 + $12,800 + $1,900 = $70,220.