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	70,000	120,000	75,000	80,000	100,000
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?

	Yes
	No

A

B

C

D

E

F

F

1Chapter 8: Applying Excel 2 3DataYear 2 QuarterYear 3 Quarter4 1234125Budgeted unit sales50,000 70,000 120,000 75,000 80,000 100,000 6 7 Selling price per unit$7per unit 8 Accounts receivable, beginning balance$65,000 9 Sales collected in the quarter sales are made75% 10 Sales collected in the quarter after sales are made25% 11 Desired ending finished goods inventory is30%of the budgeted unit sales of the next quarter 12 Finished goods inventory, beginning12,000units 13 Raw materials required to produce one unit5pounds 14 Desired ending inventory of raw materials is10%of the next quarter's production needs 15 Raw materials inventory, beginning23,000pounds 16 Raw material costs$0.80per pound 17 Raw materials purchases are paid60%in the quarter the purchases are made 18 and40%in the quarter following purchase 19 Accounts payable for raw materials, beginning balance$81,500 20