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SHOW WORK IF POSSIBLE PLEASE value: 33.34 points Requirement 2 The company has j

ID: 2554115 • Letter: S

Question

SHOW WORK IF POSSIBLE PLEASE

value: 33.34 points Requirement 2 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 follo wing projections in the budget: Data Year 2 Quarter Year 3 Quarter 50,000 70,000 120,000 70,000 85,000 95,000 Budgeted unit sales Selling price per unit $7 per unit 1 Chapter 7: Applying Excel Year 2 Quarter 3 Data 4 5 Budgeted unit sales Year 3 Quarter 4 70,000 50,000 70,000 120,000 85.000 95,000 Selling price per unit S8 per unit 8Accounts receivable, beginning b 9Sales collected in the quarter sales are made 10 .Sales collected in the quarter after sales are made 11Desired ending finished goods inventory is 12 Finished goods inventory, beginning 13 Raw materials required to produce one u 14Desired ending inventory of raw materials is 15.Raw materials inventory, beginning 16Raw material costs 7.Raw materials purchases are paid 18 and 9. Accounts payable for raw materials, beginning balance 20 S65,000 75% 25% 30% of the budgeted unit sales of the next quarter 12,000 units 5 pounds 10% of the next quarter's production needs 23,000 pounds $0.80 per pound 60% in the quarter the purchases are made 40% in the quarter following purchase S81,500

Explanation / Answer

a.

Year 2 Quarters

Total

1

2

3

4

Budgeted unit sales

  50,000

70,000

120,000

70,000

310,000

Selling price per unit

$ 7

$ 7

$ 7

$ 7

$ 7

Total sales

$ 350,000

$ 490,000

$ 840,000

$ 490,000

$ 2,170,000

Cash collection on the quarter

$ 262,500

$ 367,500

$ 630,000

$ 367,500

$ 1,627,500

Cash collection on the following quarter

$ 65,000

$ 87,500

$ 122,500

$ 210,000

$ 485,000

Total cash collection

$   327,500

$ 455,000

$ 752,500

$ 577,500

$ 2,112,500

Expected cash collection for the year = $ 2,112,500

b.

Year 2 Quarters

Year 3 Quarters

Total (Year 2)

1

2

3

4

1

2

Budgeted unit sales

50,000

70,000

120,000

70,000

85,000

95,000

310,000

Add: Finished goods ending inventory

21,000

36,000

21,000

25,500

28,500

Less: Finished goods beginning inventory

12,000

21,000

36,000

21,000

25,500

Total required production

59,000

85,000

105,000

74,500

88,000

323,500

Total required production in the year = 323,500 units

c.

Year 2 Quarters

Year 3 Quarter

Total (Year 2)

1

2

3

4

1

Total required production

59,000

85,000

105,000

74,500

88,000

323,500

Raw materials needed per unit in pounds

5

5

5

5

5

Total raw material required for production

295,000

425,000

525,000

372,500

440,000

1,617,500

Add: raw material ending inventory

42,500

52,500

37,250

44,000

Less: raw material beginning inventory

23,000

25,500

31,500

22,350

Raw materials to be purchased in pounds

314,500

452,000

530,750

394,150

1,691,400

Cost of raw material per pound

$0.80

$0.80

$0.80

$0.80

Total cost of raw materials to be purchased

$251,600

$361,600

$424,600

$315,320

$1,353,120

Total cost of raw materials to be purchased for the year = $1,353,120

d.

Year 2 Quarters

Total (Year 2)

1

2

3

4

Total cost of raw materials to be purchased

               $251,600

               $361,600

               $424,600

               $315,320

            $1,353,120

Payment released in the quarter

               $150,960

               $216,960

               $254,760

               $189,192

Payment released in the following quarter (for credit purchase)

                  $81,500

               $100,640

               $144,640

               $169,840

Total expected cash disbursement for raw material

               $232,460

               $317,600

               $399,400

               $359,032

            $1,308,492

Total expected cash disbursement for raw material for the year = $1,308,492

e.

Yes,

Budgeted production on 3rd quarter is 105,000 units which is more than the quarterly production capacity of the company.

Year 2 Quarters

Total

1

2

3

4

Budgeted unit sales

  50,000

70,000

120,000

70,000

310,000

Selling price per unit

$ 7

$ 7

$ 7

$ 7

$ 7

Total sales

$ 350,000

$ 490,000

$ 840,000

$ 490,000

$ 2,170,000

Cash collection on the quarter

$ 262,500

$ 367,500

$ 630,000

$ 367,500

$ 1,627,500

Cash collection on the following quarter

$ 65,000

$ 87,500

$ 122,500

$ 210,000

$ 485,000

Total cash collection

$   327,500

$ 455,000

$ 752,500

$ 577,500

$ 2,112,500