Question

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:

	Year 2 Quarter					Year 3 Quarter
Data	1	2	3	4		1	2
Budgeted unit sales	50,000	65,000	110,000	70,000		90,000	95,000
Selling price per unit	$7

	A	B	C	D	E	F	G
1	Chapter 8: Applying Excel
2
3	data					Year 3	Quarter
4		1	2	3	4	1	2
5	budgeted unit sales	50,000	65,000	110,000	70,000	90,000	95,000
6
7	selling price per unit	$7	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	$.8	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

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?

Answer 1