Answer Happy

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
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