Question
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
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 | 45,000 | 70,000 | 110,000 | 70,000 | 85,000 | 90,000 |
Selling price per unit | $7 | per unit |
|
Data | Year 2 Quarter | Year 3 Quarter | ||||
1 | 2 | 3 | 4 | 1 | 2 | |
Budgeted Unit Sales | 45,000 | 70,000 | 110,000 | 70,000 | 85,000 | 90,000 |
selling price per unit | $8 per unit | |||||
Accounts receivable, beginning 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 is | 30% of the budgeted unit sales of the next quarter | |||||
finished goods inventory, beginning | 12,000 units | |||||
raw materials required to produce one unit | 5 pounds | |||||
desired ending inventory of raw materials is | 10% of the next quarter's production needs | |||||
raw materials inventory, beginning | 23,000 pounds | |||||
raw materials cost | $0.80 | |||||
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 |
What are the total expected cash collections for the year under this revised budget?
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