Question

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): 2nd Quarter 3rd Quarter 15,400 4th Quarter 1st Quarter Budgeted unit sales 12,400 13,400 14,400 The selling price of the company's product is $23 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 $73,000. The company expects to start the first quarter with 2,480 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 2,680 units.

Answer 1

Solution: Sales Budget Budgeted unit sales Selling price per unit Total Sales 1st quarter 2nd quarter 3rd quarter 4th quarter| Year 12400 13400 15400 14400 55600|| 23 23 23 285200 308200 354200 331200 1278800 23 23 Schedule of Expected Cash Collections* 1st quarter 2nd quarter 3rd quarter 4th quarterl Year Beginning accounts receivable 73000 0 0 0 73000 1 st quarter sales 185380855600 0 270940 2nd quarter sales 0 200330 92460 0 292790 3rd quarter sales 0 0 230230 106260 336490 4th quarter sales 0 0 215280) 215280 Total cash collections 258380 285890322690 3215400 1188500 Production Budget Budgeted unit sales Add desired ending inventory Total units needed Less beginning inventory Required production 1st quarter 2nd quarter 3rd quarter 4th quarterl Year 12400 13400 15400 14400 55600 2680 3080 2880 26801 2680 15080 16480 18280 170801 58280 2480 2680 3080 2880 2480 126001 13800 15200 14200 55800

73000 *Note 1: Cash Collections First Second Third Fourth Year - Total Account receivable 73000 Current Year 1st quarter sales 65% of 285200 185380 185380 30% of 285200 85560 85560 2nd quarter sales 65% of 308200 200330 200330 30% of 308200 92460 92460 3rd quarter sales 65% of 354200 230230 230230 30% of 354200 106260 106260 4th quarter sales 65% of 331200 215280215280 Total 258380 285890322690 321540 1188500