Question

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): 1st Quarter 11,200 2nd Quarter 2,200 3rd Quarter 14,200 4th Quarter 13,200 Budgeted unit sales The selling price of the company's product is $11 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 $70,600. The company expects to start the first quarter with 1,680 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 1,880 units. Required: 1-a. Complete the company's sales budget. Jessi Corporation Sales Budget 2nd Quarter 3rd Quarter 1st Quarter 4th Quarter Year Budgeted units sales Selling price per unit Total sales 1-b. Complete the schedule of expected cash collections. Jessi Corporation Schedule of Expected Cash Collections 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Beginning accounts receivable 1st Quarter sales 2nd Quarter sales 3rd Quarter sales 4th Quarter sales Total cash collections 2. Prepare the company's production budget for the upcoming fiscal year. Jessi Corporation Production Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Budgeted unit sales Total needs Required production in units

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Answer 1

	Sales Budget
		1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	year
Budgeted units sales		11,200	12,200	14,200	13,200	50,800
Selling price per unit		11	11	11	11	11
Total sales		123200	134200	156200	145200	558800
Schedule of Expected Cash collection
			1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	year
Beginning accounts receivable			70,600				70,600
1st Qtr sale			80080	36960			117040
2nd Qtr sale				87230	40260		127490
3rd Qtr sale					101530	46860	148390
4th Qtr sale						94380	94380
Total cash collection			150,680	124190	141790	141240	557,900
	collection = total sales *65% in month itself and total sales*30% in next month of sale
Production Budget
			1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	year
budgeted unit sales			11,200	12,200	14,200	13,200	50,800
Add Ending invnetory			1830	2130	1980	1,880	1,880
total needs			13,030	14,330	16,180	15,080	52,680
less opening inventory			-1680	-1,830	-2,130	-1,980	-1,680
Required production in units			11,350	12,500	14,050	13,100	51,000
		ending inventory =		units sales of next month *15%