Question

The marketing department of Jessi Corporation has submitted the follwing sales forecast for the upcoming fiscal year (All Sales are on account):

Budgeted unit sales..................... 1st quarter :11,000    2nd Quarter 12,000 3rd quarter 14,000    4th quarter 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% o sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be colleted 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 invenory 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.

1. Calculate the estimated sales of each quarter of the fiscal year and for the year as a whole. (HINT REFER TO SCHEDULE for guidance)

2. Calculate the expeted cash collections for each quarter of the fiscal year and for the year as a whole (HINT: refer to schedule 1 for guidance)

3. Calculate required production in units of finished goods for each quarter of the fiscal year and for the year as a while (HINT refer to schedule 2 for guidance)

Answer 1

Answer 1.
Sales Budget
	Qtr 1	Qtr 2	Qtr 3	Qtr 4	Total
Sales in Units	11,000	12,000	14,000	13,000	50,000
Sp Per Unit	18.00	18.00	18.00	18.00	18.00
Total Sales in $	198,000.00	216,000.00	252,000.00	234,000.00	900,000.00
Answer b
Schedule of Expected Cash Collections from Sales
	Qtr 1	Qtr 2	Qtr 3	Qtr 4	Total
Accounts Receivables, Beginning	70,200.00				70,200.00
Qtr 1 Sales	128,700.00	59,400.00	-	-	188,100.00
Qtr 2 Sales	-	140,400.00	64,800.00	-	205,200.00
Qtr 3 Sales	-	-	163,800.00	75,600.00	239,400.00
Qtr 4 Sales		-	-	152,100.00	152,100.00
Total cash Collections	198,900.00	199,800.00	228,600.00	227,700.00	855,000.00
Answer c
Production Budget
	Qtr 1	Qtr 2	Qtr 3	Qtr 4	Total
Sales In units	11,000.00	12,000.00	14,000.00	13,000.00	50,000.00
Add: Closing Inventory in units -15%	1,800.00	2,100.00	1,950.00	1,650.00	1,650.00
Total Needs	12,800.00	14,100.00	15,950.00	14,650.00	51,650.00
Less: opening Inventory in units	(1,650.00)	(1,800.00)	(2,100.00)	(1,950.00)	(1,650.00)
Required Production in Units	11,150.00	12,300.00	13,850.00	12,700.00	50,000.00