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?

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?

No

Yes

	Year 2 Quarter					Year 3 Quarter
Data	1	2	3	4		1	2
Budgeted unit sales	50,000	65,000	120,000	60,000		85,000	100,000
Selling price per unit	$7

Year 2 Quarter Year 3 Quarter Data 1 2 3 14 1 2 Budgeted unit sales 50,000 65,000 120,000 60,000 85,000 100,000 Selling price per unit $7 Data Year 2 Quarter Year 3 Quarter 1 2 4 1 2 Budgeted unit sales 50,000 45,000 120,000 60,000 85,000 100000 Selling price per unit $5 per unit $65.000 Accounts receivable beginning balance 75% Sales collected in the quarter sales are made 25% Sales collected in the quarter after sales are made 30% of the budgeted unit sales of the next Quarter - Desired ending finished goods Inventory is Finished goods Inventory, beginning units 12,000 pounds Raw materials required to produce one unit Desired ending Inventory 10% of raw materials is of the next quarter's production needs 23,000 pounds Raw materials inventory beginning Raw material costs $0.80 per pound Raw materials purchases are paid 604 In the quarter the purchases are made and 40 In the quarter following purchase Accounts payable for raw $61,500 materials, beginning balance Enter a formula into each of the cels marked with a ? below Review Problem Budget Schedules