Question

Download the Applying Excel form and enter formulas in all cells that contain question marks. For example, in cell B26 enter the formula "= B5". Required: 1. Check your worksheet by changing the budgeted unit sales in Quarter 2 of Year 2 in cell C5 to 75,000 units. The total expected cash collections for the year should now be $2,085,000. The required production for the year should be 274,000 units. The cost of raw materials to be purchased for the year should be $1,106,800, whereas the total cash disbursements for the year should be $1,095,980. If you do not get this answer, find the errors in your worksheet and correct them. 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 80,000 units in any one quarter. Is this a potential problem? 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? 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: 1 Chapter 8: Applying Excel 3 Data Budgeted unit sales - 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 - Raw material costs - Raw materials purchases are paid and - Accounts payable for raw materials, beginning balance Enter a formula into each of the cells marked with a? below Review Problem: Budget Schedules Construct the sales budget Budgeted unit sales Selling price per unit Total sales Construct the schedule of expected cash collections Accounts receivable, beginning balance First-quarter sales Second-quarter sales Third-quarter sales Fourth-quarter sales Total cash collections Construct the production budget Budgeted unit sales Add desired finished goods inventory Total needs Less beginning inventory Required production Construct the raw materials purchases budget Required production (units) Raw materials required to produce one unit Production needs (pounds) Add desired ending inventory of raw materials (pounds) Total needs (pounds) Less beginning inventory of raw materials (pounds) Raw materials to be purchased Cost of raw materials per pound Cost of raw materials to be purchased Construct the schedule of expected cash payments Accounts payable, beginning balance First-quarter purchases Second-quarter purchases Third-quarter purchases Fourth-quarter purchases Total cash disbursements B C D E F G H Year 2 Quarter 40,000 60,000 3 $8 per unit $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 Year 3 Quarter 1 80,000 70,000 80,000 67

Answer 1

To check the revised budget, analyze the changes in expected cash collections, required production, cost of raw materials, and expected cash disbursements. Calculate the total expected cash collections, total required production, total cost of raw materials, and total expected cash disbursements using the given formulas. The potential problem raised by the production manager is the limited availability of a complex milling machine, preventing the plant from producing more than 80,000 units in any one quarter.

Step-by-step explanation:

In order to check the revised budget, we need to analyze the changes in the expected cash collections, required production, cost of raw materials, and expected cash disbursements.

a. The total expected cash collections for the year under this revised budget can be calculated by summing up the cash collections for each quarter. The cash collections for each quarter can be calculated by multiplying the budgeted unit sales for the quarter with the selling price per unit and the percentage of sales collected in the quarter.

b. The total required production for the year under this revised budget can be calculated by summing up the budgeted unit sales for each quarter and adding the desired ending finished goods inventory.

c. The total cost of raw materials to be purchased for the year under this revised budget can be calculated by multiplying the required production (in units) with the raw materials required to produce one unit and adding the desired ending inventory of raw materials.

d. The total expected cash disbursements for raw materials for the year under this revised budget can be calculated by multiplying the cost of raw materials per pound with the total needs of raw materials (in pounds) and the percentage of raw materials purchases that are paid in the quarter the purchases are made.

e. The potential problem raised by the production manager is that the limited availability of a complex milling machine restricts the plant from producing more than 80,000 units in any one quarter.