how me your works!!! The company has just hired a new marketing manager who insi
ID: 2460014 • Letter: H
Question
how me your works!!!
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
Bugeted Unit sales : Year 2 Quarter 1= 50,000 2= 65,000 3= 115,000 4= 60,000
Year 3 Quarter 1= 90,000 2= 100,000
Selling price per unit = $8 per unit
Accounts receivable, beginning balance = $65,000
Sales collected in the quarter sales are made 75%
Sales collected in the quarter after 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
Desired ending inventory of raw materials is 10% of the next quarter's production needs
Raw materials inventory, beginning 23,000 pounds
Raw material cost $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 80,000 units in any one quarter. Is this a potential problem?
how me your works!!!
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:
Explanation / Answer
a .What are the total expected cash collections for the year under this revised budget? Ans) Revised revenue collection Year 2 Quarter Year 3 Quarter 1 2 3 4 1 2 Budgeted Units Sales 50000 65000 115000 60000 90000 100000 Selling Price per units $7 $7 $7 $7 $7 $7 $350,000 $455,000 $805,000 $420,000 $630,000 $700,000 Cash Collected in the Same Quarter $262,500 $341,250 $603,750 $315,000 $472,500 $525,000 Cash Collected in the next Quarter $87,500 $113,750 $201,250 $105,000 $157,500 Beginning account Receivable Collected $65,000 Total Cash collected $327,500 $428,750 $717,500 $516,250 $577,500 $682,500 Cash collected for year 2 $1,990,000 Cash collected for year 3 $1,260,000 If the Sale was happen for $8 then total cash collection as below Year 2 Quarter Year 3 Quarter 1 2 3 4 1 2 Budgeted Units Sales 50000 65000 115000 60000 90000 100000 Selling Price per units $8 $8 $8 $8 $8 $8 $400,000 $520,000 $920,000 $480,000 $720,000 $800,000 Cash Collected in the Same Quarter $300,000 $390,000 $690,000 $360,000 $540,000 $600,000 Cash Collected in the next Quarter $100,000 $130,000 $230,000 $120,000 $180,000 Beginning account Receivable Collected $65,000 Total Cash collected $365,000 $490,000 $820,000 $590,000 $660,000 $780,000 Cash collected for year 2 $2,265,000 Cash collected for year 3 $1,440,000 b. What is the total required production for the year under this revised budget? Year 2 1 2 3 4 Total required production Budgeted Production 50000 65000 115000 60000 290000 C. What is the total cost of raw materials to be purchased for the year under this revised budget? Year 2 Quarter 1 2 3 4 1 Budgeted production 50000 65000 115000 60000 90000 Beinning Inventory 23000 6500 11500 6000 9000 Expexted ending Inventory 6500 11500 6000 9000 56500 76500 121000 69000 Inventory Need to be purchase 33500 70000 109500 63000 -9000 Price of the inventory $ 0.80 $ 0.80 $ 0.80 $ 0.80 $ 26,800.00 $ 56,000.00 $ 87,600.00 $ 50,400.00 Total Expected Inventory Purchase this year $ 220,800.00 d. What are the total expected cash disbursements for raw materials for the year under this revised budget? Year 2 Quarter 1 2 3 4 Budgeted Purchase $ 26,800 $ 56,000 $ 87,600 $ 50,400 Cash paid this quarter $ 16,080.0 $ 33,600.0 $ 52,560.0 $ 30,240.0 Cash paid following quarter $ 10,720.0 $ 22,400.0 $ 35,040.0 Cash paid opening accounts payable $ 81,500 Total Cash paid this year $ 97,580.0 $ 44,320.0 $ 74,960.0 $ 65,280.0 Total Cash paid this year $ 282,140 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? No, We don't have any problem with production capacity and we exceded the 80000 units only one time.
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