You should proceed to the requirements below only after completing your worksheet. Required: 1. Check your worksheet by changing the budgeted unit sales in Quarter 2 of Year 2 in cell C5 to 75,000 units. The total expected cash collections for the year should now be $2,085,000. If you do not get this answer, find the errors in your worksheet and correct them. Have the total cash disbursements for the year changed? Why or why not? 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 80,000 90,000 100,000 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? If so, what can be done about it?

qattachments_368fb95e779548554f1abddaba817f848e878b42.xls Chapter 8: Applying Excel Data Year 2 Quarter 2 3 60,000 100,000 Budgeted unit sales 1 40,000 4 50,000 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 Accounts payable for raw materials, beginning balance Year 3 Quarter 1 2 70,000 80,000 $8 per unit $65,000 75% 25% 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 $0.80 per pound 60% in the quarter the purchases are made 40% in the quarter following purchase $81,500 Enter a formula into each of the cells marked with a ? below Review Problem: Budget Schedules Construct the sales budget 1 Budgeted unit sales Selling price per unit Total sales ? ? ? Construct the schedule of expected cash collections ? ? ? Construct the production budget ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Year 2 Quarter 2 3 ? ? ? ? ? ? ? ? ? Construct the raw materials purchases budget 1 Required production (units) Raw materials required to produce one unit Production needs (pounds) Add desired ending inventory of raw materials (pounds) Total needs (pounds) Less beginning inventory of raw materials (pounds) Raw materials to be purchased Cost of raw materials per pound Cost of raw materials to be purchased Construct the schedule of expected cash payments ? ? ? ? ? ? ? ? ? ? ? ? 4 ? ? ? ? ? ? ? Year 4 ? ? ? ? ? Year ? ? ? ? ? ? ? ? ? 4 ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Year 4 ? ? Year 3 Quarter 1 2 ? ? ? ? ? ? ? Year 2 Quarter 2 3 1 Accounts payable, beginning balance First-quarter purchases Second-quarter purchases Third-quarter purchases Fourth-quarter purchases Total cash disbursements ? ? Year 2 Quarter 2 3 ? ? ? ? ? 1 Budgeted unit sales Add desired finished goods inventory Total needs Less beginning inventory Required production 4 Year 2 Quarter 2 3 1 Accounts receivable, beginning balance First-quarter sales Second-quarter sales Third-quarter sales Fourth-quarter sales Total cash collections Year 2 Quarter 2 3 ? ? ? Year 3 Quarter 1 ? ? ? ? ? ? ? ? ? ? ? ? Year ? ? ? Year 3 Quarter 1 2