Requirement 2: er would ke o use te following project ons in the budget. The com

Question

Requirement 2: er would ke o use te following project ons in the budget. The com am has st hired a new marke n manager who m sts hat unit sa es can be dramatica y mcreased by dro ping he selling price from S8?S7 The marketing man Data Budgeted unit sales Year 2 Quarter Year 3 Quartes 45,000 65,000 105,000 70,000 85,000 100,000 Selling price per unit $7 per unit 1 Chapter 9: Applying Excel 3 Data Year 2 Quarter Year 3 Quarter 5 Bugeted unit sales 45,000 65,000 05,000 70,000 85,000 100,000 .Selling price per unit $7 per unit Accounts receivable, beginning balance $65,000 Sales colleced in the quarier sales are made 0Sale5 colectad in the quarter after sales are made 1Desired ending tinisned goods inventory is 2 Finished goods inventory, beginning 3Raw materials required to produce one uni 4Desired anding inventory of raw materials is 5 Raw matenals inventory, beginning 6Raw matenial costs 30% of the budgeted unrt sales ofthe next quarter 12,000 units 5 pounds 10% of the naxt quarter's production needs 23,000 pounds 50.80 per pound Raw materials purchapes are paid 18 and 19 ACCounts payable tor raw materials, beginning balance 60% in the quarter the purchases are made 40% in the quarter following purchase 581,500

Explanation / Answer

Solution:

Part c --- Total cost of raw materials to be purchased for the year = $1,211,400

Working as follows:

Working for Total cost of raw materials to be purchased for the year

Year 2 Quarter

Year 3 Quarter

First

Second

Third

Fourth

Year

1

Next Quarter's Budget Unit Sales

65000

105000

70000

85000

100000

Desired Ending Inventory Ration to next quarter's sales unit

30%

30%

30%

30%

30%

Desired Ending Inventory

19500

31500

21000

25500

30000

Budgeted Sales Unit

45000

65000

105000

70000

85000

Total Needs

64500

96500

126000

95500

115000

Less: Estimated Beginning Inventory (Ending Inventory of Last Quarter)

12000

19500

31500

21000

25500

Required Production in units of finished goods

52500

77000

94500

74500

89500

Units of raw materials needed per unit of finished goods (pounds)

5

5

5

5

5

Total Units of raw materials needed to meet production

262500

385000

472500

372500

447500

Add: Desired Ending Raw Material Inventory (10% of next quarter's production need)

38500

47250

37250

44750

Total Units of Raw materials needed

301000

432250

509750

417250

Less: Beginning Raw material inventory (ending inventory of last month)

23000

38500

47250

37250

Units of Raw materials to be purchased

278000

393750

462500

380000

Unit Cost of raw materials

$0.80

$0.80

$0.80

$0.80

Cost of raw materials to be purchased

$222,400

$315,000

$370,000

$304,000

$1,211,400

Part d – Total Expected Cash Disbursements for raw materials for the year = $1,171,300

Working:

Year 2 Quarter

1

2

3

4

Year

Cost of raw materials to be purchased

$222,400

$315,000

$370,000

$304,000

Schedule of expected cash disbursements for raw materials

Accounts Payable, beginning balance

$81,500

1-quarter purchases

$133,440

$88,960

2-quarter purchases

$189,000

$126,000

3-quarter purchases

$222,000

$148,000

4-quarter purchases

$182,400

Total Cash disbursements

$214,940

$277,960

$348,000

$330,400

$1,171,300

Part e --- Yes, it is a potential problem since the production requirement for quarter 3 is 94,500 Units and the production is limited to 80,000 Units.

In this case the company will not meet the sales demand by producing the enough units. Hence it is a potential problem.

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Working for Total cost of raw materials to be purchased for the year

Year 2 Quarter

Year 3 Quarter

First

Second

Third

Fourth

Year

1

Next Quarter's Budget Unit Sales

65000

105000

70000

85000

100000

Desired Ending Inventory Ration to next quarter's sales unit

30%

30%

30%

30%

30%

Desired Ending Inventory

19500

31500

21000

25500

30000

Budgeted Sales Unit

45000

65000

105000

70000

85000

Total Needs

64500

96500

126000

95500

115000

Less: Estimated Beginning Inventory (Ending Inventory of Last Quarter)

12000

19500

31500

21000

25500

Required Production in units of finished goods

52500

77000

94500

74500

89500

Units of raw materials needed per unit of finished goods (pounds)

5

5

5

5

5

Total Units of raw materials needed to meet production

262500

385000

472500

372500

447500

Add: Desired Ending Raw Material Inventory (10% of next quarter's production need)

38500

47250

37250

44750

Total Units of Raw materials needed

301000

432250

509750

417250

Less: Beginning Raw material inventory (ending inventory of last month)

23000

38500

47250

37250

Units of Raw materials to be purchased

278000

393750

462500

380000

Unit Cost of raw materials

$0.80

$0.80

$0.80

$0.80

Cost of raw materials to be purchased

$222,400

$315,000

$370,000

$304,000

$1,211,400

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.