Original Data:

New Data to replace old data:

Requirement 2:

The company has just hired a new marketing manager who insists that unit sales can be dramatically increased by dropping the selling price from $8 to $7. The marketing manager would like to use the following projections in the budget:

	Year 2 Quarter					Year 3 Quarter
Data	1	2	3	4		1	2
Budgeted unit sales	45,000	65,000	120,000	75,000		85,000	100,000
Selling price per unit	$7

Data					Year 3 Quarter
	1	2	3	4	1	2
Budgeted Unit Sales	45,000	65,000	120,000	75,000	85,000	100,000
Selling Price Per Unit	$7.00
Accounts Receivable, Beg. Balance	$65,000
Sales collected in the quarter sales are made	75%
Sales collected in the quarter after sales are made	25%
Desired Ending Finished Goods Inventory	30%	of budgeted unit sales of next quarter
Beginning Finished Goods Inventory	12,000	units
Raw materials required to produce one unit	5	pounds
Desired ending inventory of raw materials	10%	of next quarter's production needs
Beginning Raw Materials Inventory	23,000	pounds
Raw Materials costs	$0.80	per pound
Raw Materials purchases are paid	60%	in the quarter the purchases are made
and	40%	in the quarter following purchase
Accounts Payable for raw materials, beginning balance	$81,500

a. What are the total expected cash collections for the year under this revised budget?

Expected cash collections for the year: ?

b. What is the total required production for the year under this revised budget?

total required production for the year: ?

c. What is the total cost of raw materials to be purchased for the year under this revised budget?

total cost of raw materials to be purchased for the year: ?

d. What are the total expected cash disbursements for raw materials for the year under this revised budget?

Total expected cash disbursements for raw materials for the year: ?

e. After seeing this revised budget, the production manager cautioned that due to the current production constraint, a complex milling machine, the plant can produce no more than 90,000 units in any one quarter. Is this a potential problem?

No

Yes