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: a. What are the total expected cash collections for the year under this revised budget? b. What is the total required production for the year under this revised budget? c. What is the total cost of raw materials to be purchased for the year under this revised budget? d. What are the total expected cash disbursements for raw materials for the year under this revised budget? 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 90,000 units in any one quarter. Is this a potential problem?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The Chapter 8 Form worksheet is to be used to create your own worksheet version of the Review Problem in the text.

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 following projections in the budget:

a. What are the total expected cash collections for the year under this revised budget?

b. What is the total required production for the year under this revised budget?

c. What is the total cost of raw materials to be purchased for the year under this revised budget?

d. What are the total expected cash disbursements for raw materials for the year under this revised budget?

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 90,000 units in any one quarter. Is this a potential problem?

 

 

Required information
Data
Budgeted undt sales
Selling price per unit
45,000
$7
70,000
115,000
65,000
85,000
100,000
A
B
D.
E
G
1
Chapter 8: Applying Excel
3 Data
Year 3 Quarter
4
3
2
5 Budgeted unit sales
45,000
70,000
115.000
65,000
85,000
100,000
6
7 - Seling price per unit
8 Accounts receivable, beginning balance
9 - Sales collected in the quarter sales are made
per unit
65,000
75%
10 - Sales collected in the quarter after sales are made
11 - Desired endng firished goods inventory is
12 - Finished goods inventory, beginning
25%
30%
of the budgeted unit sales of the net quarter
12,000
units
13 - Raw materials required to produce one unit
14 - Desired ending inventory of raw materials is
15 Raw materials inventory, beginning
16 - Raw material costs
17 - Raw materials purchases are paid
pounds
of the next quarter's production needs
pounds
10%
23.000
0.80
per pound
in the quarter the purchases are made
in the quarter following purchase
60%
18
and
40%
19 - Accounts payable for raw materials, beginning balance
81,500
Transcribed Image Text:Required information Data Budgeted undt sales Selling price per unit 45,000 $7 70,000 115,000 65,000 85,000 100,000 A B D. E G 1 Chapter 8: Applying Excel 3 Data Year 3 Quarter 4 3 2 5 Budgeted unit sales 45,000 70,000 115.000 65,000 85,000 100,000 6 7 - Seling price per unit 8 Accounts receivable, beginning balance 9 - Sales collected in the quarter sales are made per unit 65,000 75% 10 - Sales collected in the quarter after sales are made 11 - Desired endng firished goods inventory is 12 - Finished goods inventory, beginning 25% 30% of the budgeted unit sales of the net quarter 12,000 units 13 - Raw materials required to produce one unit 14 - Desired ending inventory of raw materials is 15 Raw materials inventory, beginning 16 - Raw material costs 17 - Raw materials purchases are paid pounds of the next quarter's production needs pounds 10% 23.000 0.80 per pound in the quarter the purchases are made in the quarter following purchase 60% 18 and 40% 19 - Accounts payable for raw materials, beginning balance 81,500
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