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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: Year 2 Quarter Year 3 Quarter Data 1 2 3 4 1 2 Budgeted unit sales 45,000 70,000 110,000 70,000 80,000 95,000 Selling price per unit $7 a. What are the total expected cash collections for the year under this revised budget

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Answer:

$2,065,000

Explanation:

The company has reduced the selling price by $1 to increase its sales. The marketing manager has suggesting price cutting strategy to stop decline in sales.

The cash collection according to revised budget will be as follows;

Q1 = 45,000 units sales * $7 per unit = $315,000

Q2 = 70,000 units sales * $7 per unit = $490,000

Q3 = 110,000 units sales * $7 per unit = $770,000

Q4 = 70,000 units sales * $7 per unit = $490,000

The total cash collection for the year will amount to $2,065,000

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