Question

The marketing department of Graber Corporation has submitted the following sales forecast for the upcoming fiscal year. Budgeted unit sales First Quarter 17,900 Second Quarter 16,900 Third Quarter 15,900 Fourth Quarter 16,900 The selling price of the company's product is $31.00 per unit. Management expects to collect 85% of sales in the quarter in which the sales are made and 10% 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 $85,000. The company expects to start the first quarter with 5,100 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 5,300 units. Required: 1-a. Compute the company's total sales. Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Sales 1-b. Complete the schedule of expected cash collections. Graber Corporation Gynected Cash Collections

Answer 1

1-a. Compute the Company's Total Sales : Graber Corporation Budgeted Sales 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Particulars Total Sales : # of Budgeted Units ---- (a) Sale Price per Unit -------(b) Total Sales (a) * (b) $ $ 17,900 31 $ 554,900 $ 16,900 31 $ 523,900 $ 15,900 31 $ 492,900 $ 16,900 31 $ 523,900 $ 67,600 31 2,095,600 $ 1-b. Complete the Schedule of Cash Collections: Graber Corporation Schedule of Expected Cash Collections Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Accounts Receivables, Beginning Balance 1st Quarter Sales $ 471,665 $ 55,490 2nd Quarter Sales $ 445,315 $ 52,390 3rd Quarter Sales $ 418,965 $ 49,290 4th Quarter Sales IS 445,315 Total Cash Collections $ 556,665 $ 500,805 $ 471,355 $ 494,605 $ Year 85,000 527,155 497,705 468,255 445,315 2,023,430 497, $ $ 2. Prepare the company's production budget for the upcoming financial year. Graber Corporation Production Budget Particulars 1st Quarter 2nd Quarter 3rd Quarter Budgeted Unit Sales 17,900 16,900 15,900 Add: Closing Stock 3,380 3,180 3,380 Total units needed 21,280 20,080 19,280 Less: Opening Stock (5,100) (3,380) (3,180) Required Production 16,180 16,700 16,100 4th Quarter 16,900 5,300 22,200 (3,380) 18,820 Year 67,600 5,300 72,900 (5,100) 67,800