Question

Required 1 Required 2 Required 3 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 Required 2 Required 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 11,800 12,800 14,800 13,800 The selling price of the company’s product is $17 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 $71,800. The company expects to start the first quarter with 1,770 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 1,970 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

	Sales Budget
		1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	year
Budgeted units sales		11,800	12,800	14,800	13,800	53,200
Selling price per unit		17	17	17	17	17
Total sales		200600	217600	251600	234600	904400
Schedule of Expected Cash collection
			1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	year
Beginning accounts receivable			71,800				71,800
1st Qtr sale			130390	60180			190570
2nd Qtr sale				141440	65280		206720
3rd Qtr sale					163540	75480	239020
4th Qtr sale						152490	152490
Total cash collection			202,190	201620	228820	227970	860,600
Production Budget
			1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	year
budgeted unit sales			11,800	12,800	14,800	13,800	53,200
Add Ending invnetory			1920	2220	2070	1,970	1,970
total needs			13,720	15,020	16,870	15,770	55,170
less opening inventory			-1770	-1,920	-2,220	-2,070	-1,770
Required production in units			11,950	13,100	14,650	13,700	53,400