Question

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal...

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted unit sales 12,500 13,500 15,500 14,500 The selling price of the company’s product is $24 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $73,200. The company expects to start the first quarter with 2,500 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,700 units. Required: 1-a. Compute the company’s total sales. 1-b. Complete the schedule of expected cash collections. 2. Prepare the company’s production budget for the upcoming fiscal year.

Homework Answers

Answer #1
SALES BUDGET
Q1 Q2 Q3 Q4 Year
Budgeted Sales units 12,500 13,500 15,500 14,500 56,000
Selling price per unit 24 24 24 24 24
Total Sales 300,000 324,000 372,000 348,000 1,344,000
EXPECTED CASH COLLECTIONS
Q1 Q2 Q3 Q4 Year
Accounts receivable balance 73,200 73200
Q1 Sales 225,000 60000 285000
Q2 Sales 243000 64800 307800
Q3. Sales 279,000 74,400 353400
Q4 Sales 261,000 261000
Total Cash Collections 298,200 303,000 343,800 335,400 1280400
PRODUCTION BUDGET
Q1 Q2 Q3 Q4 Year
Budgeted Sales Units 12,500 13,500 15,500 14,500 56,000
Add: Desired Ending Finished inventory 2,700 3,100 2,900 2,700 2,700
Total Needs 15,200 16,600 18,400 17,200 58,700
Less: Beginning Finished Inventory 2,500 2,700 3,100 2,900 2,500
Required Production in units 12,700 13,900 15,300 14,300 56,200
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