Question

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): Budgeted unit sales 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 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 Required 1 Required 2 >

Answer 1

Sales Budget

	1st quarter	2nd quarter	3rd quarter	4th quarter	Year
Budgeted sales	11400	12400	14400	13400	51600
Selling price per unit	13	13	13	13	13
Total sales	148200	161200	187200	174200	670800

Schedule of Cash collections

	1st quarter	2nd quarter	3rd quarter	4th quarter	Year
Total sales	148,200	161,200	187,200	174,200	670,800
Accounts receivable, Beginning	71,000				71,000
Quarter 1 Sales	96,330	44,460			140,790
Quarter 2 sales		104,780	48,360		153,140
Quarter 3 sales			121,680	56,160	177,840
Quarter 4 Sales				113,230	113,230
Total cash collection	167,330	149,240	170,040	169,390	656,000

Note that collection of quarter sales is 65% in the quarter itself, 30% in the next quarter and balance 5% is uncollectible. For example :

1^st quarter collection in 1^st quarter = 148,200 * 0.65 = 96,330

1^st quarter collection in 2^nd quarter = 148,200 * 0.3 =44,460

The rest calculations are done in similar way.

Production Budget

It depicts the units required of raw materials for final production.

	1st quarter	2nd quarter	3rd quarter	4th quarter	Year
Budgeted sales	11,400	12,400	14,400	13,400	51,600
Add: desired inventory level	1,860	2,160	2,010	1,910	1,910
Total units needed	13,260	14,560	16,410	15,310	53,510
Less: beginning inventory	1,710	1,860	2,160	2,010	1,710
Required production	11,550	12,700	14,250	13,300	51,800