Requirement 2: The company has just hired a new marketing manager who insists th

Question

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 S8 to S7. The marketing manager would like to use the following projections in the budge Data Year 2 Quarter Year 3 Quarter 45,000 65000 105,000 65,000 90,000 95,000 Budgeted unit sales Selling price per unit S7 per unit 1 Chapter 7: Applying Excel 3 Data Year 2 Quarter Year 3 Quarter 5 Budgeted unit sales 45.000 65,000 105,000 65,000 90,000 95.000 7Selling price per unit 8Accountscivable, beginning balance 9Sales collected in the quarter sales are made 0Sales collected in the quarter atter sales are made S8 per unit $65,000 75% 25% 30% of the budgeted unit sales of the next quarter Desired ending finished goods inventory is 2Finished goods inventory, beginning 3Raw matenials required to produce one unit 4Desired ending inventory of raw materials is 15 Raw mateñials inventory, beginning 16Raw material costs 12,000 units 5 pounds 10% of the next quarters production needs 23,000 pounds 5080 per pound 60% in the quarter the purchases are made 40% in the quarter following purchase Raw materials purchases are paid 18 and 19Accounts payable for ravw materials, beginning balance 20 881,500 a. What are the total expected cash collections for the year under this revised budget? cash collections for the S 1,911,250 b. What is the total required production for the year under this revised budget? Total required production for the y 295,000units c. What is the total cost of raw materials to be purchased for the year under this revised budget? Total cost of raw materials to be purchased for the y $ 1,198,200 d. What are the total expected cash disbursements for raw materials for the year under this revised raw

Explanation / Answer

Schedule of Expected Cash Collections Year 2 Quarter 1 2 3 4 Total Budgeted Unit Sales 45,000 65,000 105,000 65,000 280,000 Selling Price Per unit $7 $7 $7 $7 $7 Sales in $ $315,000 $455,000 $735,000 $455,000 $1,960,000 Collection in same Quarter (75%) $236,250 $341,250 $551,250 $341,250 $1,470,000 Collection in next Quarter (25%) $65,000 $78,750 $113,750 $183,750 $441,250 Total Expected Cash Collection $301,250 $420,000 $665,000 $525,000 $1,911,250 Production Budget Year 2 Quarter 1 2 3 4 1 Total Budgeted Units Sales (A) 45,000 65,000 105,000 65,000 90,000 280,000 Beginning Inventory (B) 12000 19500 31500 19500 27000 12000 Ending Inventory Desired (30% of next quarter) ( C) 19500 31500 19500 27000 28500 27000 Total required production (A - B + C) 52,500 77,000 93,000 72,500 91,500 295,000 Raw Material Purchase Budget Year 2 Quarter 1 2 3 4 1 Total Total Required Production 52,500 77,000 93,000 72,500 91500 295,000 Raw Material Per unit (in Pounds) 5 5 5 5 5 5 Production need (A) 262500 385000 465000 362500 457500 1475000 Beginning Inventory (B) 23000 38500 46500 36250 23000 Ending Inventory Desired (10% of next Quarter need) (C ) 38500 46500 36250 45750 45750 Raw Material to be purchased (A - B + C) 278000 393000 454750 372000 1497750 Cost Per Pound $0.80 $0.80 $0.80 $0.80 0.8 Cost of Raw Materials to be purchased $222,400.00 $314,400.00 $363,800.00 $297,600.00 1198200 Schedule of Cash Disbursements 1 2 3 4 Total Cost of raw materials to be purchased $222,400.00 $314,400.00 $363,800.00 $297,600.00 $1,198,200.00 Payment in the same Quarter of purchase (60%)of r $133,440.00 $188,640.00 $218,280.00 $178,560.00 $718,920.00 Payment in the next Quarter of purchase (40%) $81,500 $88,960.00 $125,760.00 $145,520.00 $441,740.00 Total expected cash disbursements for raw materials $214,940.00 $277,600.00 $344,040.00 $324,080.00 $1,160,660.00

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