a 1 2 3 4 1 2 Budgeted unit sales 50,000 65,000 120,000 60,000 90,000 90,000 Selling price per unit $7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Chapter 8: Applying Excel Data Year 3 Quarter 1 2 3 4 1 2 Budgeted unit sales 50,000 65,000 120,000 60,000 90,000 90,000 • Selling price per unit $7 per unit • Accounts receivable, beginning balance $65,000 • Sales collected in the quarter sales are made 75% • Sales collected in the quarter after sales are made 25% • Desired ending finished goods inventory is 30% of the budgeted unit sales of the next quarter • Finished goods inventory, beginning 12,000 units • Raw materials required to produce one unit 5 pounds • Desired ending inventory of raw materials is 10% of the next quarter's production needs • Raw materials inventory, beginning 23,000 pounds • Raw material costs $0.80 per pound • Raw materials purchases are paid 60% in the quarter the purchases are made and 40% in the quarter following purchase • Accounts payable for raw materials, beginning balance $81,500
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:
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Year 2 Quarter |
Year 3 Quarter |
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| Data | 1 | 2 | 3 | 4 | 1 | 2 | |
| Budgeted unit sales | 50,000 | 65,000 | 120,000 | 60,000 | 90,000 | 90,000 | |
| Selling price per unit | $7 | ||||||
| Chapter 8: Applying Excel | ||||||
| Data | Year 3 Quarter | |||||
| 1 | 2 | 3 | 4 | 1 | 2 | |
| Budgeted unit sales | 50,000 | 65,000 | 120,000 | 60,000 | 90,000 | 90,000 |
| • Selling price per unit | $7 | per unit | ||||
| • |
$65,000 | |||||
| • Sales collected in the quarter sales are made | 75% | |||||
| • Sales collected in the quarter after sales are made | 25% | |||||
| • Desired ending finished goods inventory is | 30% | of the budgeted unit sales of the next quarter | ||||
| • Finished goods inventory, beginning | 12,000 | units | ||||
| • Raw materials required to produce one unit | 5 | pounds | ||||
| • Desired ending inventory of raw materials is | 10% | of the next quarter's production needs | ||||
| • Raw materials inventory, beginning | 23,000 | pounds | ||||
| • Raw material costs | $0.80 | per pound | ||||
| • Raw materials purchases are paid | 60% | in the quarter the purchases are made | ||||
| and | 40% | in the quarter following purchase | ||||
| • Accounts payable for raw materials, beginning balance | $81,500 |
What are the total expected cash collections for the year under this revised budget?
What is the total required production for the year under this revised budget?
What is the total cost of raw materials to be purchased for the year under this revised budget?
What are the total expected cash disbursements for raw materials for the year under this revised budget?
. 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?
multiple choice
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Yes
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No
Solution:
Total expected cash collections is based on sales of each month and their respective percentage of collection in different months. Total required production for the year is based on sales units for the period and finished goods inventories for each month.
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