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NewGen Computers is preparing its budget for 2008. Sales for the year are budgeted at $1,000,000; 20% are cash sales and 80% are credit sales.

NewGen Computers is preparing its budget for 2008. Sales for the year are budgeted at $1,000,000; 20% are cash sales and 80% are credit sales. The company expects to collect 60% of all credit sales in 2008 Budgeted expenses are $800,000. These expenditures include 25,000 for depreciation and $497,000 for variable manufacturing overhead.

If the desired ending cash balance is $30,000, how much must NewGen borrow during the year?

a) $120,000 b) $125,000 c) $95,000 d) $150,000

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