In: Accounting
Exercise 8-14 Sales and Production Budgets [LO8-2, LO8-3]
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 | 11,000 | 12,000 | 14,000 | 13,000 |
The selling price of the company’s product is $18.00 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 $70,200.
The company expects to start the first quarter with 1,650 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 1,850 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.
Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole.
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Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole.
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Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole.
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Sales Budget | |||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | year | |||||
Budgeted units sales | 11,000 | 12,000 | 14,000 | 13,000 | 50,000 | ||||
Selling price per unit | 18 | 18 | 18 | 18 | 18 | ||||
Total sales | 198000 | 216000 | 252000 | 234000 | 900000 | ||||
Schedule of Expected Cash collection | |||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | year | |||||
Beginning accounts receivable | 70,200 | 70,200 | |||||||
1st Qtr sale | 128700 | 59400 | 188100 | ||||||
2nd Qtr sale | 140400 | 64800 | 205200 | ||||||
3rd Qtr sale | 163800 | 75600 | 239400 | ||||||
4th Qtr sale | 152100 | 152100 | |||||||
Total cash collection | 198,900 | 199800 | 228600 | 227700 | 855,000 | ||||
Production Budget | |||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | year | |||||
budgeted unit sales | 11,000 | 12,000 | 14,000 | 13,000 | 50,000 | ||||
Add Ending invnetory | 1800 | 2100 | 1950 | 1,850 | 1,850 | ||||
total needs | 12,800 | 14,100 | 15,950 | 14,850 | 51,850 | ||||
less opening inventory | -1650 | -1,800 | -2,100 | -1,950 | -1,650 | ||||
Required production in units | 11,150 | 12,300 | 13,850 | 12,900 | 50,200 | ||||