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28 June, 08:49

Overhead expenses are budgeted at $2,000 per month. Included in the $2,000 are $500 of monthly depreciation expense and $200 of allocated expenses related to the insurance premium that is paid in September. What is the cash outflow for overhead for the month of May? a. $ 200b. $ 500c. $1,300d. $1,200

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  1. 28 June, 09:09
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    Cash outflow will be $1300

    So option (C) will be correct answer

    Explanation:

    We have given overhead expense = $2000 per month

    Depreciation expenses = $500

    And allocated insurance expense = $200

    So non cash expense = depreciation expense + allocated insurance expense = $500+$200 = $700

    We have to fond the cash out flow

    Cash outflow is equal to = Overhead expense - non cash expense = $2000 - $700 = $1300

    So cash outflow will be $1300

    So option (C) will be correct answer
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