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:
Check your worksheet by changing the budgeted unit sales in Quarter 2 of Year 2 in cell C5 to 75,000 units. The total expected cash collections for the year should now be $2,085,000. If you do not get this answer, find the errors in your worksheet and correct them.
| Data | Year 2 Quarter | Year 3 Quarter | ||||
| 1 | 2 | 3 | 4 | 1 | 2 | |
| Budgeted unit sales | 50,000 | 70,000 | 115,000 | 60,000 | 80,000 | 95,000 |
| Selling price per unit | $7 | per unit | ||||
| A | B | C | D | E | F | F | |
| 1 | Chapter 9: Applying Excel | ||||||
| 2 | |||||||
| 3 | Data | Year 2 Quarter | Year 3 Quarter | ||||
| 4 | 1 | 2 | 3 | 4 | 1 | 2 | |
| 5 | Budgeted unit sales | 50,000 | 70,000 | 115,000 | 60,000 | 80,000 | 95,000 |
| 6 | |||||||
| 7 | Selling price per unit | $7 | per unit | ||||
| 8 | Accounts receivable, beginning balance | $65,000 | |||||
| 9 | Sales collected in the quarter sales are made | 75% | |||||
| 10 | Sales collected in the quarter after sales are made | 25% | |||||
| 11 | Desired ending finished goods inventory is | 30% | of the budgeted unit sales of the next quarter | ||||
| 12 | Finished goods inventory, beginning | 12,000 | units | ||||
| 13 | Raw materials required to produce one unit | 5 | pounds | ||||
| 14 | Desired ending inventory of raw materials is | 10% | of the next quarter's production needs | ||||
| 15 | Raw materials inventory, beginning | 23,000 | pounds | ||||
| 16 | Raw material costs | $0.80 | per pound | ||||
| 17 | Raw materials purchases are paid | 60% | in the quarter the purchases are made | ||||
| 18 | and | 40% | in the quarter following purchase | ||||
| 19 | Accounts payable for raw materials, beginning balance | $81,500 | |||||
| 20 | |||||||
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?
Here is what I got... but my answers are wrong... please help
| Chapter 9: Applying Excel | |||||||
| Data | Year 2 Quarter | Year 3 Quarter | |||||
| 1 | 2 | 3 | 4 | 1 | 2 | ||
| Budgeted unit sales | 50,000 | 70,000 | 115,000 | 60,000 | 80,000 | 95,000 | |
| Selling price per unit | $7 | 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 material 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 | ||||||
| Enter a formula into each of the cells marked with a ? below | |||||||
| Review Problem: Budget Schedules | |||||||
| Construct the sales budget | Year 2 Quarter | Year 3 Quarter | |||||
| 1 | 2 | 3 | 4 | 1 | 2 | ||
| Budgeted unit sales | 50,000 | 70,000 | 115,000 | 60,000 | 80,000 | 95,000 | |
| Selling price per unit | $7 | $7 | $7 | $7 | $7 | $7 | |
| Total sales | $350,000 | $490,000 | $805,000 | $420,000 | $560,000 | $665,000 | |
| Construct the schedule of expected cash collections | Year 2 Quarter | ||||||
| 1 | 2 | 3 | 4 | Year | |||
| Accounts receivable, beginning balance | $ 65,000 | $ 65,000 | |||||
| First-quarter sales | 262,500 | $ 87,500 | $ 350,000 | ||||
| Second-quarter sales | 367,500 | $ 122,500 | $ 490,000 | ||||
| Third-quarter sales | 603,750 | $ 201,250 | $ 805,000 | ||||
| Fourth-quarter sales | 315,000 | $ 315,000 | |||||
| Total cash collections | $ 327,500 | $ 455,000 | $ 726,250 | $ 516,250 | $ 2,025,000 | ||
| Construct the production budget | Year 2 Quarter | Year 3 Quarter | |||||
| 1 | 2 | 3 | 4 | Year | 1 | 2 | |
| Budgeted unit sales | 50,000 | 70,000 | 115,000 | 60,000 | 295,000 | 80,000 | 95,000 |
| Add desired finished goods inventory | 21,000 | 34,500 | 18,000 | 24,000 | 24,000 | 28,500 | |
| Total needs | 71,000 | 104,500 | 133,000 | 84,000 | 319,000 | 108,500 | |
| Less beginning inventory | 12,000 | 21,000 | 34,500 | 18,000 | 12,000 | 24,000 | |
| Required production | 59,000 | 83,500 | 98,500 | 66,000 | 307,000 | 84,500 | |
| Construct the raw materials purchases budget | Year 2 Quarter | Year 3 Quarter | |||||
| 1 | 2 | 3 | 4 | Year | 1 | ||
| Required production (units) | 59,000 | 83,500 | 98,500 | 66,000 | 307,000 | 84,500 | |
| Raw materials required to produce one unit | 5 | 5 | 5 | 5 | 5 | 5 | |
| Production needs (pounds) | 295,000 | 417,500 | 492,500 | 330,000 | 1,535,000 | 422,500 | |
| Add desired ending inventory of raw materials (pounds) | 41,750 | 42,500 | 28,000 | 36,500 | 36,500 | ||
| Total needs (pounds) | 336,750 | 460,000 | 520,500 | 366,500 | 1,571,500 | ||
| Less beginning inventory of raw materials (pounds) | 23,000 | 41,750 | 42,500 | 28,000 | 23,000 | ||
| Raw materials to be purchased | 313,750 | 418,250 | 478,000 | 338,500 | 1,548,500 | ||
| Cost of raw materials per pound | $0.80 | $0.80 | $0.80 | $0.80 | $0.80 | ||
| Cost of raw materials to be purchased | $251,000 | $334,600 | $382,400 | $270,800 | $1,238,800 | ||
| Construct the schedule of expected cash payments | Year 2 Quarter | ||||||
| 1 | 2 | 3 | 4 | Year | |||
| Accounts payable, beginning balance | $ 81,500 | $ 81,500 | |||||
| First-quarter purchases | 150,600 | $ 100,400 | 251,000 | ||||
| Second-quarter purchases | 200,760 | $ 133,840 | $ 334,600 | ||||
| Third-quarter purchases | 229,440 | $ 152,960 | 382,400 | ||||
| Fourth-quarter purchases | 162,480 | $ 162,480 | |||||
| Total cash disbursements | $ 232,100 | $ 301,160 | $ 363,280 | $ 315,440 | $ 1,211,980 | ||
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Strategic Pricing And Management Accounting
Authors: David Dugdale
1st Edition
78-1032224824, 1032224827
