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 2nd Quarter 3rd Quarter 4th Quarter 14,000 Budgeted unit sales 12,000 13,000 15,000 The selling price of the company's product is $19 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 $72,200. The company expects to start the first quarter with 2,400 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 2,600 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

Solution 1:

Sales Budget - Jessi Corporation
Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Budgeted unit sales	12000	13000	15000	14000	54000
Selling price per unit	$19.00	$19.00	$19.00	$19.00	$19.00
Budgeted Sales Revenue	$228,000.00	$247,000.00	$285,000.00	$266,000.00	$1,026,000.00

Solution 2:

Schedule of expected cash collections - Jessi Corporation
Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Beginning receivables	$72,200.00				$72,200.00
Collection of Q1 sales	$148,200.00	$68,400.00			$216,600.00
Collection of Q2 sales		$160,550.00	$74,100.00		$234,650.00
Collection of Q3 sales			$185,250.00	$85,500.00	$270,750.00
Collection of Q4 sales				$172,900.00	$172,900.00
Expected cash collection	$220,400.00	$228,950.00	$259,350.00	$258,400.00	$967,100.00

Solution 3:

Production Budget - Jessi Corporation
Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Budgeted unit sales	12000	13000	15000	14000	54000
Ending finished goods inventory (20% of next quarter budgeted sales)	2600	3000	2800	2600	2600
Total needs	14600	16000	17800	16600	56600
Beginning inventory	2400	2600	3000	2800	2400
Budgeted production units	12200	13400	14800	13800	54200