Question

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year:

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Budgeted sales (units)	9,900	11,900	13,900	12,900

The selling price of the company’s product is $39 per unit. Management expects to collect 55% of sales in the quarter in which the sales are made and 40% in the following quarter; 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which are expected to be collected in the first quarter, is $99,500.

The company expects to start the first quarter with 2,950 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 3,200 units.

Required:

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

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

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

Answer 1