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

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 $8 to S7. The marketing manager would like to use the following projections in the budget Data Year 2 Quarter Year 3 Quarter 4 2 5,000 70,000 105,000 60,000 90,000 95,000 Budgeted unit sales Selling price per unit S7 per unit 1 Chapter 7: Applying Excel 3 Data 5 Budgeted unit sales 7Selling price per unit Year 2 Quarter Year 3 Quarter 45,000 70,000 105,000 60,000 90,000 95,000 $8 per unit 8Accounts receivable, beginning balance 9 Sales 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 13Raw materials required to produce one unit 14Desired ending inventory of raw materials is 15Raw materials inventory, beginnin 16Raw material costs 17Raw materials purchases are paid 18 and 9Accounts payable for raw materials, beginning balance 20 $65,000 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 $81,500

Explanation / Answer

EXPECTED CASH COLLECTIONS Q-1 Q-2 Q-3 Q-4 TOTAL beginning Accounts receivable 65,000 65,000 Quarter-1 Sales 236,250 78750 315,000 Quarter-2 Sales 367500 122500 490,000 Quarter-3 Sales 551,250 183750 735,000 Quarter-4Sales 315000 315,000 Total Cash Collections 301,250 446,250 673,750 498750 1,920,000 PRODUCTION BUDGET Q-1 Q-2 Q-3 Q-4 TOTAL Q-1 Q-2 Budgeted Sales Units 45,000 70,000 105,000 60,000 280,000 90,000 95,000 Add: Desired Ending Finished inventory 21,000 31,500 18,000 27,000 27,000 28,500 Total Needs 66,000 101,500 123,000 87,000 307,000 118,500 Less: Beginning Finished Inventory 12,000 21,000 31,500 18,000 12,000 27,000 Required Production in units 54,000 80,500 91,500 69,000 295,000 91,500 RAW MATERIAL PURCHASE BUDGET Q-1 Q-2 Q-3 Q-4 TOTAL Q-1 Budgeted Production units 54,000 80,500 91,500 69,000 295,000 91,500 Raw material required peer unit 5 5 5 5 5 5 Total Production needs 270,000 402,500 457,500 345,000 1,475,000 457,500 Add: Desired Ending Inventory 40,250 45,750 34,500 45,750 45,750 Total needs 310,250 448,250 492,000 390,750 1,520,750 Less: Beginning Inventory 23,000 40,250 45,750 34,500 23,000 Purchase Units 287,250 408,000 446,250 356,250 1,497,750 Cost price per unit 0.80 0.80 0.80 0.80 0.80 Budgeted Purchase in $ 229,800 326,400 357,000 285,000 1,198,200 EXPECTED CASH PAYMENTS Q-1 Q-2 Q-3 Q-4 YEAR Beginning Accounts payable 81,500 81500 Quarter-1 137,880 91920 229800 Quarter-2 195840 130560 326400 Quarter-3 214200 142,800 357000 Quarter-4 171,000 171000 Total Cash disbursement 219,380 287,760 344,760 313,800 1165700

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