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:

	Year 2 Quarter					Year 3 Quarter
Data	1	2	3	4		1	2
Budgeted unit sales	50,000	70,000	105,000	65,000		85,000	95,000
Selling price per unit	$7

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 80,000 units in any one quarter. Is this a potential problem?

multiple choice

• Yes

• No

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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 Budgeted unit sales Selling price per unit 1 50,000 $7 Year 2 Quarter 2 3 70,000 105,000 4 65,000 Year 3 Quarter 1 2 85,000 95,000 A B D 1 Chapter 8: Applying Excel E F 2 3 Data 4 Year 3 Quarter 1 2 3 5 4 Budgeted unit sales 1 50,000 70,000 105,000 6 65,000 85,000 TEO $ xt 7 per unit 7 8 $ 9 65,000 75% 25% 10 11 12 Selling price per unit - Accounts receivable, beginning balance - Sales collected in the quarter sales are made Sales collected in the quarter after sales are made Desired ending finished goods inventory is - Finished goods inventory, beginning - Raw materials required to produce one unit - Desired ending inventory of raw materials is Raw materials inventory, beginning Raw material costs Raw materials purchases are paid and 13 30% of the budgeted unit sales of the next quarter 12,000 units 5 pounds 10% of the next quarter's production needs 23,000 pounds 14 15 16 $ 17 0.80 per pound 60% in the quarter the purchases are made 40% in the quarter following purchase 18