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

Question

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?

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 Budgeted unit sales Year 2 Quarter Year 3 Quarter 4 45,000 65,000 105,000 75,000 85,000 100,000 Selling price per unit $7 per unit 1Chapter 9: Applying Excel 3 Data 4 5 Budgeted unit sales Year 2 Quarter Year 3 Quarter 45,000 65,000 105,000 75,000 85,000 100,000 $7 per unit 7.Selling price per unit 8Accounts receivable, beginning balance 9Sales collected in the quarter sales are made 10.Sales collected in the quarter after sales are made 11 . Desired ending finished goods inventory is 12 . Finished goods inventory, beginning 13. Raw materials required to produce one unit 14Desired ending inventory of raw materials is 15.Raw materials inventory, beginning 6Raw material costs 17.Raw materials purchases are paid 18 and 19 .Accounts 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

a. Expected cash collections for the year 2 = $1,963,750

Working:

b. Required production for the year = 303,500 units

Working:

c. Total cost of raw material purchases for the year $1,231,400

Working:

d. Expected cash disbursements for raw materials for the year = $1,199,220

Sales Budget Quarter1 Quarter 2 Quarter 3 Quarter 4 Total Budgeted Sales 45000 65000 105000 75000 290000 Unit selling price $7.00 $7.00 $7.00 $7.00 $7.00 Budgeted Sales 315000 455000 735000 525000 2030000 Schedule of cash collections: Quarter1 Quarter 2 Quarter 3 Quarter 4 Total Beginning Receivables 65000 65000 Quarter 1 year 2 236250 78750 315000 Quarter 2 year 2 341250 113750 455000 Quarter 3 year 2 551250 183750 735000 Quarter 4 year 2 393750 393750 Total Cash collections 301250 420000 665000 577500 1963750

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