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	12,800	13,800	15,800	14,800

The selling price of the company’s product is $27 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 $73,800.

The company expects to start the first quarter with 2,560 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,760 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.

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	11,400	12,400	14,400	13,400

The selling price of the company’s product is $13 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 $71,000.

The company expects to start the first quarter with 1,710 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 1,910 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.

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. a.Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole.

b. Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole.

c. Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole.

4. The difference between capital goods and material inputs is that:

1. Capital goods are durable; Materials are used up
2. Capital goods become physically part of the output produced; Materials do not
3. Capital goods are machinery; Materials are everything else
4. Capital goods are bough on credit; Materials are paid for in cash

5. The amount of output required for consumption by producers at their customary standard of living, plus the amount required to replace capital depreciation and material inputs, is referred to as:

1. Surplus product
2. Net product
3. Total product
4. Necessary product

7. The amount of output allocated towards the consumption of producers at their customary standard of living, plus the surplus product is referred to as:

1. Net product
2. Necessary product
3. Total product
4. Household product

8. An economic system in which a political elite claims the surplus product by taxing farmers and tenants is know as

1. Independent production
2. Central planning
3. Feudalism
4. Agrarian despotism

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

Units to be produced
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.

Prepare the company's sales budget and schedule of expected cash collections.
Prepare the company's production budget for the upcoming fiscal year.

Jasper Fruits Corporation wholesales peaches and oranges. Barbara Jasper is working with the company’s accountant to prepare next year’s budget. Ms. Jasper estimates that sales will increase 6 percent for peaches and 11 percent for oranges. The current year’s sales revenue data follow:

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
Peaches	$	225,000		$	245,000		$	305,000		$	245,000		$	1,020,000
Oranges		411,000			461,000			581,000			391,000			1,844,000
Total	$	636,000		$	706,000		$	886,000		$	636,000		$	2,864,000

Based on the company’s past experience, cost of goods sold is usually 60 percent of sales revenue. Company policy is to keep 10 percent of the next period’s estimated cost of goods sold as the current period’s ending inventory. (Hint: Use the cost of goods sold for the first quarter to determine the beginning inventory for the first quarter.)

Required

1. Prepare the company’s sales budget for the next year for each quarter by individual product.

2. If the selling and administrative expenses are estimated to be $650,000, prepare the company’s budgeted annual income statement.

3. Ms.Jasper estimates next year’s ending inventory will be $35,500 for peaches and $56,700 for oranges. Prepare the company’s inventory purchases budgets for the next year, showing quarterly figures by product.

	First Quarter Second Quarter Third Quarter Fourth Quarter Total Peaches $0 Oranges $0 Total $0 $0 $0 $0 $0

	JASPER FRUITS CORPORATION Budgeted Annual Income Statement 0 $0

	First Quarter Second Quarter Third Quarter Fourth Quarter Inventory needed 0 0 0 0

	First Quarter Second Quarter Third Quarter Fourth Quarter Inventory needed 0 0 0 0 Required purchases $0 $0 $0 $0

Jasper Fruits Corporation wholesales peaches and oranges. Barbara Jasper is working with the company’s accountant to prepare next year’s budget. Ms. Jasper estimates that sales will increase 7 percent for peaches and 12 percent for oranges. The current year’s sales revenue data follow:

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
Peaches	$	228,000		$	248,000		$	308,000		$	248,000		$	1,032,000
Oranges		412,000			462,000			582,000			392,000			1,848,000
Total	$	640,000		$	710,000		$	890,000		$	640,000		$	2,880,000

Based on the company’s past experience, cost of goods sold is usually 65 percent of sales revenue. Company policy is to keep 20 percent of the next period’s estimated cost of goods sold as the current period’s ending inventory. (Hint: Use the cost of goods sold for the first quarter to determine the beginning inventory for the first quarter.)

Required

1. Prepare the company’s sales budget for the next year for each quarter by individual product.

2. If the selling and administrative expenses are estimated to be $680,000, prepare the company’s budgeted annual income statement.

3. Ms.Jasper estimates next year’s ending inventory will be $34,100 for peaches and $56,500 for oranges. Prepare the company’s inventory purchases budgets for the next year, showing quarterly figures by product

a

First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Total
Peaches	not attempted	not attempted	not attempted	not attempted	$0
Oranges	not attempted	not attempted	not attempted	not attempted	$0
Total	$0	$0	$0	$0	$0

b

JASPER FRUITS CORPORATION
Budgeted Annual Income Statement
Sales revenue	not attempted
Cost of goods sold	not attempted
Gross profit	0
	not attempted
Net income	$0

c

First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Salesselected answer correct	not attempted	not attempted	not attempted	not attempted
Cost of goods soldselected answer correct	not attempted	not attempted	not attempted	not attempted
Plus: Desired ending inventoryselected answer correct	not attempted	not attempted	not attempted	not attempted
Inventory needed	0	0	0	0
Less: Beginning inventoryselected answer correct	not attempted	not attempted	not attempted	not attempted
Required purchases	$0	$0	$0	$0

c2

First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Sales	not attempted	not attempted	not attempted	not attempted
Cost of goods sold	not attempted	not attempted	not attempted	not attempted
Plus: Desired ending invent	not attempted	not attempted	not attempted	not attempted
Inventory needed	0	0	0	0
Less: Beginning inventory	not attempted	not attempted	not attempted	not attempted
Required purchases	$0	$0	$0	$0

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	11,400	12,400	14,400	13,400

The selling price of the company’s product is $13 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 $71,000.

The company expects to start the first quarter with 1,710 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 1,910 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.

	1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Total sales

Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole.

	1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Total cash collections

Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole.

	1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Required production in units

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.