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	110,000	70,000		80,000	90,000
Selling price per unit	$7

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

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

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

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

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 80,000 units in any one quarter. Is this a potential problem?

• No

• Yes

A D E F G Chapter 8: Applying Excel 1 Data Year 3 Quarter 1 2 3 4 1 2 4 Budgeted unit sales 110,000 70,000 90,000 45,000 65,000 80,000 5 6 7 Selling price per unit Accounts receivable, beginning balance 9 . Sales collected in the quarter sales are made S 7 per unit S 65,000 8 75% Sales collected in the quarter after sales are made 25% 10 Desired ending finished goods inventory is 30% of the budgeted unit sales of the next quarter 12,000 units 11 Finished goods inventory, beginning Raw materials required to produce one unit Desired ending inventory of raw materials is 12 5 pounds 13 10% of the next quarter's production needs 14 Raw materials inventory, beginning 23,000 pounds 15 Raw material costs 0.80 per pound 16 Raw materials purchases are paid 60% in the quarter the purchases are made 40% in the quarter following purchase 81,500 17 and 18 19Accounts payable for raw materials, beginning balance