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
45,000
70,000
105,000
70,000
85,000
95,000
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
45,000
70,000
105,000
70,000
85,000
95,000
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
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?
Yes
No
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
