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 | 11,700 | 12,700 | 14,700 | 13,700 |
The selling price of the company’s product is $16 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 $71,600.
The company expects to start the first quarter with 1,755 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,955 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.
Answer:
1-a. Company Total Sales
1-b. Schedule of expected cash collections
2. Production Budget
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