Question

The marketing dept of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account).

Budget unit sales:

Quarter 1 11,000

Quarter 2 12,000

Quarter 3 14,000

Quarter 4 13,000

The selling price of the product is $18 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 $70,200.

The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires a finished goods inventory in each quarter equal to 15% of the next quarter's budgeted sales. The desired ending finished goods inventory for the 4th quarter is 1,850 units.

In an excel file, (a) prepare a sales budget, (b) cash receipts budget, and (c) production budget. Upload the file to the practice exam. I will post the correct answer in a powerpoint file to the HOMEWORK module for you to compare your results and see how you did.

Answer 1

	Sales Budget
		1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	year
Budgeted units sales		11,000	12,000	14,000	13,000	50,000
Selling price per unit		18	18	18	18	18
Total sales		198000	216000	252000	234000	900000
Schedule of Expected Cash collection
			1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	year
Beginning accounts receivable			70,200				70,200
1st Qtr sale			128700	59400			188100
2nd Qtr sale				140400	64800		205200
3rd Qtr sale					163800	75600	239400
4th Qtr sale						152100	152100
Total cash collection			198,900	199800	228600	227700	855,000
Production Budget
			1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	year
budgeted unit sales			11,000	12,000	14,000	13,000	50,000
Add Ending invnetory			1800	2100	1950	1,850	1,850
total needs			12,800	14,100	15,950	14,850	51,850
less opening inventory			-1650	-1,800	-2,100	-1,950	-1,650
Required production in units			11,150	12,300	13,850	12,900	50,200