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	70,000	120,000	75,000		85,000	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 90,000 units in any one quarter. Is this a potential problem?

multiple choice

No

Yes Correct

Required information \begin{tabular}{|c|c|c|c|c|c|c|c|c|} \hline & A & & B & C & D & E & F & G \\ \hline 1 & Chapter 20: Applying Excel & & & & & & & \\ \hline \multicolumn{9}{|l|}{2} \\ \hline 3 & Data & & & & & & \multicolumn{2}{|c|}{ Year 3 Quarter } \\ \hline 4 & & & 1 & 2 & 3 & 4 & 1 & 2 \\ \hline 5 & Budgeted unit sales & & 45,000 & 70,000 & 120,000 & 75,000 & 85,000 & 90,000 \\ \hline \multicolumn{9}{|l|}{6} \\ \hline 7 & - Selling price per unit & $ & 7 & per unit & & & & \\ \hline 8 & - Accounts receivable, beginning balance & $ & 65,000 & & & & & \\ \hline 9 & - Sales collected in the quarter sales are made & & 75% & & & & & \\ \hline 10 & - Sales collected in the quarter after sales are made & & 25% & & & & & \\ \hline 11 & - Desired ending finished goods inventory is & & 30% & \multicolumn{5}{|c|}{ of the budgeted unit sales of the next quarter } \\ \hline 12 & - Finished goods inventory, beginning & & 12,000 & units & & & & \\ \hline 13 & - Raw materials required to produce one unit & & 5 & pounds & & & & \\ \hline 14 & - Desired ending inventory of raw materials is & & 10% & \multicolumn{5}{|c|}{ of the next quarter's production needs } \\ \hline 15 & - Raw materials inventory, beginning & & 23,000 & pounds & & & & \\ \hline 16 & - Raw material costs & $ & 0.80 & per pound & & & & \\ \hline 17 & - Raw materials purchases are paid & & 60% & \multicolumn{5}{|c|}{ in the quarter the purchases are made } \\ \hline 18 & and & & 40% & \multicolumn{5}{|c|}{ in the quarter following purchase } \\ \hline 19 & - Accounts payable for raw materials, beginning balance & $ & 81,500 & & & & & \\ \hline \end{tabular} Prev of 2 Next