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:

Data

Year 2 Quarter

Year 3 Quarter

1

2

3

4

1

2

Budgeted unit sales

50,000

65,000

115,000

75,000

90,000

90,000

Selling price per unit

$7

per unit

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 90,000 units in any one quarter. Is this a potential problem?

1 Chapter 7: Applying Excel 3 Data 5 Budgeted unit sales 7Sell Year 2 Quarter Year 3 Quarter 2 65,000 115,000 75,000 90,000 90,000 ing price per unit 58 per unit 585,000 Accounts receivable, beginning balance 9Sales collected in the quarter sales are made 10 Sales collected in the quarter after sales are made 11- Desired ending finished goods inventory is 12. Finished goods inventory, beginning 13 Raw materials required to produce one unit 14 Desired ending inventory 15 Raw materials inventory,beginning 16 Raw msterial costs 7.Raw msterials purchases are paid 18 and 25% 30% of the budgeted unit sales of the next quarter 12,000 units 5 pounds 10% of the next quarter's production needs of raw materials is 23,000 pounds 0.80 per pound 60% in the quarter the purchases are made 40% in the quarter following purchase 1 Accounts peyable for raw materials, beginning balance 581,500