Question

In order to maintain a cash cushion of $10,000, Vernon Medical Clinic needs to borrow how much in the month of May?

(A) $20,000
(B) $25,000
(C) $30,000
(D) $35,000

Answer 1

To maintain a cash cushion of $10,000, Vernon Medical Clinic needs to borrow an additional $15,000.

Step-by-step explanation:

To maintain a cash cushion of $10,000, Vernon Medical Clinic needs to borrow an additional amount of money. To calculate this, we need to find the difference between the cash cushion and the amount of revenue and variable costs. The revenue is $20,000 and the variable costs are $15,000. Therefore, the additional amount Vernon Medical Clinic needs to borrow is $15,000 ($10,000 cash cushion - $20,000 revenue + $15,000 variable costs).

The answer is: $15,000.