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	11,900	12,900	14,900	13,900

The selling price of the company’s product is $18 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 $72,000.

The company expects to start the first quarter with 1,785 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 1,985 units.

Required:

1-a.	Complete the company's sales budget.

            

1-b.	Complete the schedule of expected cash collections.

            

2.	Prepare the company’s production budget for the upcoming fiscal year.

           

Answer 1

1-a:
	Sales Budget
				1st Quarter	2nd Quarter	3rd Quarter	4th Quarter		Total
		Budgeted unit sales		11,900	12,900	14,900	13,900		53,600
		selling price per unit		$                   18	$                   18	$                   18	$                   18
		Total Sales		$       2,14,200	$       2,32,200	$       2,68,200	$       2,50,200		$       9,64,800
1-b:	Schedule of Expected cash collection:
				1st Quarter	2nd Quarter	3rd Quarter	4th Quarter		Total
		Sales		$       2,14,200	$       2,32,200	$       2,68,200	$       2,50,200
		Collection of sales of:
		Beginning Accounts Receivable		$           72,000					$           72,000
		1st Quarter		$       1,60,650	$           42,840				$       2,03,490
		2nd Quarter			$       1,74,150	$           46,440			$       2,20,590
		3rd Quarter				$       2,01,150	$           53,640		$       2,54,790
		4th Quarter					$       1,87,650		$       1,87,650
				$       2,32,650	$       2,16,990	$       2,47,590	$       2,41,290		$       9,38,520
2)
	Production Budget:
				1st Quarter	2nd Quarter	3rd Quarter	4th Quarter		Total
		Expcected Sales		11,900	12,900	14,900	13,900		53,600
		Add desired ending inventory		1,935	2,235	2,085	1985
		Total Units available		13,835	15,135	16,985	15,885
		Less Beginning inventory		1785	1,935	2,235	2,085
		Units to be produced		12,050	13,200	14,750	13,800		53,800