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 12,300 13,300 15,300 14,300

The selling price of the company’s product is $22 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 $72,800.

The company expects to start the first quarter with 2,460 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 2,660 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

1.a Computing Total Sales.

Particulars Quarter 1 Quarter 2 Quarter 3 Quarter 4
Sales units 12300 13300 15300 14300
Selling Price 22 22 22 22
Sales Value 270600 292600 336600 314600

1.b Computing Expected Cash Collection.

particulars Quarter 1 Quarter 2 Quarter 3 Quarter 4
Collection from
Current month sales 202950 219450 252450 235950
Previous month sales 72800 54120 58520 67320
Total collection 275750 273570 310970 303270

2. Computing production budget.

Particulars Quarter 1

Quarter 2

Quarter 3 Quarter 4
Sales units 12300 13300 15300 14300
+ Closing units 2660 3060 2860 2660
- Opening Units -2460 -2660 -3060 -2860
Production 12500 13700 15100 14100
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