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 11,700 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. 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

Answer:

1. Calculation the estimated sales for each quarter of the fiscal year and for the year as a whole.
Particulars	Quarters
	1	2	3	4	Total of year
Budgeted unit sales	11700	12700	14700	13700
Selling Price per unit $16 per unit
Estimated Sale per Quarter	$187,200	$203,200	$235,200	$219,200	$844,800
( Units sales*$16 per unit)	(11700*$16)	(12700*$16)	(14700*$16)	(11700*$16)
2.Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole.
Particulars	Quarter
	1	2	3	4	Total of Years
Receivable at Beginning	$71,600
Estimated Cash Collection	$140,400	$189,840	$217,040	$211,440
75% , 20% in Next Qtr	($187200*75%)	($203200*75%+$187200*20%)	($235200*75%+$203200*20%)	($219200*75%+$235200*20%)
Total Cash collection	$212,000	$189,840	$217,040	$211,440	$830,320
3.Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole
Particulars	Quarter
	1	2	3	4	Total of Years
Budgeted Unit Sales	11700	12700	14700	13700	52800
Add: Inventory at end	1905	2205	2055	1955
	(12700*15%)	(14700*15%)	(13700*15%)	(given)
Less: Inventory at the Beginning	1755	1905	2205	2055
	(given)	(1st qtr End Inventory)	(2nd qtr End Inventory)	(3rd qtr End Inventory)
Production Required	11850	13000	14550	13600	53000