Requirement 2: The company just hired a new marketing manager who insists 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 selling price per unit 1 Chapter 8: Applying Excel A 50,000 $7 Year 2 Quarter 2 Year 3 Quarter 1 2 65,000 120,000 65,000 80,000 100,000 B C D E F G 2 3 Data 4 5 Budgeted unit sales 2 3 4 50,000 65,000 120,000 65,000 6 7 Selling price per unit 8 •Accounts receivable, beginning balance Sales collected in the quarter sales are made S 7 per unit 65,000 75% 9 Sales collected in the quarter after sales are made 10 Desired ending finished goods inventory is 25% 30% of the budgeted unit sales of the next quarter 11 Finished goods inventory, beginning 12,000 units 12 Raw materials required to produce one unit 13 Desired ending inventory of raw materials is 14 Raw materials inventory, beginning 5 pounds 10% of the next quarter's production needs 23,000 pounds 15 Raw material costs S 0.80 per pound 16 Raw materials purchases are paid 60% in the quarter the purchases are made 17 and 18 Accounts payable for raw materials, beginning balance S 40% in the quarter following purchase 81,500 19 a. What are the total expected cash collections for the year under this revised budget? Expected cash collections for the year b. What is the total required production for the year under this revised budget? Total required production for the year 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 year d. What are the total expected cash disbursements for raw materials for the year under this revised budget? Total expected cash disbursements for raw materials for the year Year 3 Quarter 1 2 80,000 100,000 e. After seeing this revised budget, the production manager cautioned that due to the limited availability of a complex milling machine, the plant can produce no more than 90,000 units in any one quarter. Is this a potential problem? Yes

Requirement 2: The company just hired a new marketing manager who insists 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 selling price per unit 1 Chapter 8: Applying Excel A 50,000 $7 Year 2 Quarter 2 Year 3 Quarter 1 2 65,000 120,000 65,000 80,000 100,000 B C D E F G 2 3 Data 4 5 Budgeted unit sales 2 3 4 50,000 65,000 120,000 65,000 6 7 Selling price per unit 8 •Accounts receivable, beginning balance Sales collected in the quarter sales are made S 7 per unit 65,000 75% 9 Sales collected in the quarter after sales are made 10 Desired ending finished goods inventory is 25% 30% of the budgeted unit sales of the next quarter 11 Finished goods inventory, beginning 12,000 units 12 Raw materials required to produce one unit 13 Desired ending inventory of raw materials is 14 Raw materials inventory, beginning 5 pounds 10% of the next quarter's production needs 23,000 pounds 15 Raw material costs S 0.80 per pound 16 Raw materials purchases are paid 60% in the quarter the purchases are made 17 and 18 Accounts payable for raw materials, beginning balance S 40% in the quarter following purchase 81,500 19 a. What are the total expected cash collections for the year under this revised budget? Expected cash collections for the year b. What is the total required production for the year under this revised budget? Total required production for the year 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 year d. What are the total expected cash disbursements for raw materials for the year under this revised budget? Total expected cash disbursements for raw materials for the year Year 3 Quarter 1 2 80,000 100,000 e. After seeing this revised budget, the production manager cautioned that due to the limited availability of a complex milling machine, the plant can produce no more than 90,000 units in any one quarter. Is this a potential problem? Yes

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 51E

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