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:

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?

Year 2 Quarter Year 3 Quarter Data 1 2 4 1 2 Budgeted unit sales Selling price per unit 45,000 $7 115,000 90,000 70,000 65,000 100,000 B C D E F G 1 Chapter 8: Applying Excel 2 Year 3 Quarter Data 4 1 3 4 1 2 70,000 Budgeted unit sales 45,000 115,000 65,000 90,000 100,000 6 7 Selling price per unit $ 7 per unit Accounts receivable, beginning balance $ 65,000 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 5 pounds Raw materials required to produce one unit 14 10% of the next quarter's production needs Desired ending inventory of raw materials is 15 Raw materials inventory, beginning 23,000 pounds 16 0.80 per pound Raw material costs $ 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 2