Check your worksheet by changing the budgeted unit sales in Quarter 2 of Year 2
ID: 2459830 • Letter: C
Question
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?
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 limited availability of 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?
Explanation / Answer
Correcion in Quarter 2 year 2 Quarter 1 2 3 4 Year Budgeted Unit Sale 40,000 75,000 100,000 50,000 265,000 Selling Price per unit 8 8 8 8 7 Sale Value 320,000 600,000 800,000 400,000 2,120,000 Accounts recievable Beginning 65,000 65,000 First Quarter Sale 240,000 80,000 320,000 Second Quarter Sale 450,000 150,000 600,000 Third Quarter Sale 600,000 200,000 800,000 Fourth Quarter Sale 300,000 300,000 Total Cash Collection 305,000 530,000 750,000 500,000 2,085,000 Yes cash Dsbursement will be change because change in sale unit purchase qty also increase so it will be more Expected Cash Flow year 2 Quarter 1 2 3 4 Year Budgeted Unit Sale 50,000 70,000 120,000 80,000 320,000 Selling Price per unit 7 7 7 7 7 Sale Value 350,000 490,000 840,000 560,000 2,240,000 Accounts recievable Beginning 65,000 65,000 First Quarter Sale 262,500 87,500 350,000 Second Quarter Sale 367,500 122,500 490,000 Third Quarter Sale 630,000 210,000 840,000 Fourth Quarter Sale 420,000 420,000 Total Cash Collection 327,500 455,000 752,500 630,000 2,165,000 Required Production year 2 Quarter year 3 quarter 1 2 3 4 Year 1 2 Budgeted Unit Sale 50,000 70,000 120,000 80,000 320,000 90,000 100,000 Add desired finished goods inventory 21,000 36,000 24,000 27,000 27,000 30,000 Total needs 71,000 106,000 144,000 107,000 347,000 120,000 Less beginning Inventory 12000 21,000 36,000 24,000 12,000 27,000 Required Production 59,000 85,000 108,000 83,000 335,000 93,000 Cost of raw material To be purchased year 2 Quarter year 3 quarter 1 2 3 4 Year 1 2 Required production Units 59,000 85,000 108,000 83,000 335,000 93,000 Raw material required to produce one unit 5 5 5 5 5 5 Production needs 295,000 425,000 540,000 415,000 1,675,000 465,000 Add desire ending Inventory 42,500 54,000 41,500 46,500 46,500 Total needs 337,500 479,000 581,500 461,500 1,721,500 Less : Beginning Inventory 23000 42,500 54,000 41,500 23000 Raw material to be purchase 314,500 436,500 527,500 420,000 1,698,500 Cost of raw material per pound 0.8 0.8 0.8 0.8 0.8 Cost of raw material To be purchased 251,600 349,200 422,000 336,000 1,358,800 Expected cash Disbursements year 2 Quarter 1 2 3 4 Year Accounts payable beginning 81,500 81,500 First Quarter Purchase 150,960 100,640 251,600 Second Quarter Purchase 209,520 139,680 349,200 Third Quarter Purchase 253,200 168,800 422,000 Fourth Quarter Purchase 201,600 201,600 Total Cash Disbursement 232,460 310,160 392,880 370,400 1,305,900
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