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	65,000	115,000	70,000	80,000	90,000
Selling price per unit	$7	per unit

Chapter 7: Applying Excel

2

3

Data

Year 2 Quarter

Year 3 Quarter

4

1

2

3

4

1

2

5

Budgeted unit sales

50,000

65,000

115,000

70,000

80,000

90,000

6

7

Selling price per unit

$8

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