Question

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: 2 Quarter 50,000 65,000 105,000 75,000 85,000 90,000 Budgeted unit sales Selling price per unit $7 per unit 1 Chapter 7: Applying Excel 3 Data 5 Budgeted unit sales Year 2 Quarter Year 3 Quarter 50.000 66,000 10000 75,000 5,000 90,000 7Selling price per unit 8Accounts recevable, beginning balance 9 Sales collected in the quarter sales are made 0 .Sales collected in the quarter 11 Desired ending firished goods inventoryi 12 Finished goods invertiory, beginning 3 Raw materials required to produce one unit 4 Desired ending inventory of raw materials s 5Raw materials inventory, beginning 6 Raw material costs 17Raw materials purchases are paid 18 and 19 Accounts payable for raw materials, beginning balance$81 20 s8 per unit $65,000 75% 25% so% of the budgeted unt sales of the next quarter after sales are made 12,000 units 5 pounds 10% of the next quarters product on needs 23,000 pounds 50.80 per pound 60% I'm quarter the purchases are made 40% in the quarter fellowing purchase ,500

Answer 1

A)Quarter 1 = 50000units *7*0.75(current year)= 262500          +      65000 ( opening Accounts Receivable Balance = 327500

Quarter 2 = 350000*0.25 + 65000*0.75*7= 422500

Quarter 3 = 455000*0.25+735000*0.75=113750+551250=655000

Quarter 4 = 75000*0.75*7+735000*0.25= 577500

Total = 1982500 Collection from sale of goods and subsequent and current cash collections

B)

	Q1	Q2	Q3	Q4	Q1
Current Quarter sales	50000	65000	105000	75000	85000
Closing inventory 30% of projected sales of next quarter	19500	31500	22500	25500
less- op inventory	-12000	-19500	-31500	-22500
Production per quarter	57500	77000	96000	78000
therefore total equals	308500

c)

Production per quarter	57500	77000	96000	78000	86500
Raw material required	287500	385000	480000	390000	432500
Closing 10% of next quarter	38500	48000	39000	43250
less- opening	-23000	-38500	-48000	-39000
Total purchased(pounds)	303000	394500	471000	394250
cost 0.8$	242400	315600	376800	315400

Total Cost

1250200

D)

Total purchased(pounds)	303000	394500	471000	394250
cost 0.8$	242400	315600	376800	315400
60% of current quarter	145440	189360	226080	189240
40% of previous Quarter	61500	58176	75744	90432
Total payment	206940	247536	301824	279672
Total Cash Disbursements	1035972

e)Yes since because a set of cash flow assumptions depend on the fact that production would be above 80000units in Q3 and Q4