Chapter 8: Applying Excel: Exercise (Part 2 of 2) (Algo)

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:

Data	Year 2 Quarter				Year 3 Quarter
	1	2	3	4	1	2
Budgeted unit sales	50,000	65,000	110,000	75,000	80,000	100,000
Selling price per unit	$ 7

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 80,000 units in any one quarter. Is this a potential problem?

A B C D E F G 1 Chapter 8: Applying Excel 2 3 Data Year 3 Quarter 4 1 2 3 4 1 2 5 Budgeted unit sales 50,000 65,000 110,000 75,000 80,000 100,000 6 7 $ 7 per unit 65,000 8 9 75% 10 25% 11 Selling price per unit Accounts receivable, beginning balance Sales collected in the quarter sales are made Sales collected in the quarter after sales are made Desired ending finished goods inventory is Finished goods inventory, beginning Raw materials required to produce one unit Desired ending inventory of raw materials is Raw materials inventory, beginning 30% of the budgeted unit sales of the next quarter 12,000 units 12 13 14 15 16 Raw material costs $ 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 17 Raw materials purchases are paid 18 and 19 Accounts payable for raw materials, beginning balance $