Question

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	11,800	12,800	14,800	13,800

The selling price of the company’s product is $17 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% 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 $71,800.

The company expects to start the first quarter with 1,770 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 1,970 units.

Required:

1. Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole.

2. Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole.

3. Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole.

Answer 1

BUDGETED SALES
	1St Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Budgeted Sales (Units)	11,800.00	12,800.00	14,800.00	13,800.00	53,200.00
Sales (Price)	17.00	17.00	17.00	17.00
Budgeted Sales (Amount)	200,600.00	217,600.00	251,600.00	234,600.00	904,400.00
CASH COLLECTON STATUS
	1St Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Opening amount to collect/Last month Collection	71,800.00	60,180.00	65,280.00	75,480.00	272,740.00
65% current month sales	130,390.00	141,440.00	163,540.00	152,490.00	587,860.00
Total Collection	202,190.00	201,620.00	228,820.00	227,970.00	860,600.00
inventory Status
	1St Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Quantity required for meeting Current quarter Sales	11,800.00	12,800.00	14,800.00	13,800.00
Finished goods required end of each quarter	1,920.00	2,220.00	2,070.00	1,970.00
Total quantity required for this quarter	13,720.00	15,020.00	16,870.00	15,770.00
Less : Opening balance	1,770.00	1,920.00	2,220.00	2,070.00
Required production	11,950.00	13,100.00	14,650.00	13,700.00	53,400.00
BUDGETED SALES
	1St Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Budgeted Sales (Units)	11,800.00	12,800.00	14,800.00	13,800.00	53,200.00
Sales (Price)	17.00	17.00	17.00	17.00
Budgeted Sales (Amount)	200,600.00	217,600.00	251,600.00	234,600.00	904,400.00
CASH COLLECTON STATUS
	1St Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Opening amount to collect/Last month Collection	71,800.00	60,180.00	65,280.00	75,480.00	272,740.00
65% current month sales	130,390.00	141,440.00	163,540.00	152,490.00	587,860.00
Total Collection	202,190.00	201,620.00	228,820.00	227,970.00	860,600.00
inventory Status
	1St Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Quantity required for meeting Current quarter Sales	11,800.00	12,800.00	14,800.00	13,800.00
Finished goods required end of each quarter	1,920.00	2,220.00	2,070.00	1,970.00
Total quantity required for this quarter	13,720.00	15,020.00	16,870.00	15,770.00
Less : Opening balance	1,770.00	1,920.00	2,220.00	2,070.00
Required production	11,950.00	13,100.00	14,650.00	13,700.00	53,400.00