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 11,800 2nd Quarter 12,800 3rd Quarter 14,800 4th Quarter 13,800 The selling price of the company's product is $17 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 $71,800. The company expects to start the first quarter with 1,770 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 1,970 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

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Total sales	$     200,600.00	$     217,600.00	$ 251,600.00	$      234,600.00	$      904,400.00

.

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Total Cash Collection	$     202,190.00	$     201,620.00	$ 228,820.00	$      227,970.00	$      860,600.00

.

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Required Production in Units	11950	13100	14650	13700	53400

.

Working

Jessi Corporation
Sales Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Budgeted Unit sales	11800	12800	14800	13800	53200
Selling price per Unit	$                17.00	$                17.00	$            17.00	$                 17.00	$                17.00
Total sales	$     200,600.00	$     217,600.00	$ 251,600.00	$      234,600.00	$      904,400.00

.

Jessi Corporation
Schedule of Expected Cash Collections
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Beginning Accounts Receivables	$       71,800.00				$        71,800.00
1st Quarter Sales	$     130,390.00	$        60,180.00			$      190,570.00
2nd Quarter Sales		$     141,440.00	$    65,280.00		$      206,720.00
3rd Quarter Sales			$ 163,540.00	$         75,480.00	$      239,020.00
4th Quarter Sales				$      152,490.00	$      152,490.00
Total Cash Collection	$     202,190.00	$     201,620.00	$ 228,820.00	$      227,970.00	$      860,600.00

.

Jessi Corporation
Production Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Budgeted Unit sales	11800	12800	14800	13800	53200
Add: Desired Ending Inventory	1920	2220	2070	1970	1970
Total Needs	13720	15020	16870	15770	55170
Less: Opening Inventory	1770	1920	2220	2070	1770
Required Production in Units	11950	13100	14650	13700	53400