Exercise 8-14 Sales and Production Budgets [LO8-2, L08-3) The marketing departme

Question

Exercise 8-14 Sales and Production Budgets [LO8-2, L08-3) The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): AL 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 14,700 Budgeted unit sales 12,700 13,700 15,700 The selling price of the company's product is $26 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% in the folowing 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 $73,600 eBook Print eferences es The company expects to start the first quarter with 2,540 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 in e toy for the fourth quarter is 2,740 units Required: 1. Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole. 2. Celculate 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. Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole

Explanation / Answer

SALES BUDGET Q1 Q2 Q3 Q4 Year Budgeted Sales units 12,700 13,700 15,700 14,700 56,800 Selling price per unit 26 26 26 26 26 Total Sales 330,200 356,200 408,200 382,200 1,476,800 EXPECTED CASH COLLECTIONS Q1 Q2 Q3 Q4 Year Accounts receivable 73,600 73600 Q1 Sales 247,650 66040 313690 Q2 Sales 267150 71240 338390 Q3 Sales 306,150 81,640 387790 Q4 Sales 286,650 286650 Total Cash Collections 321,250 333,190 377,390 368,290 1400120 PRODUCTION BUDGET Q1 Q2 Q3 Q4 Year Budgeted Sales Units 12,700 13,700 15,700 14,700 56,800 Add: Desired Ending Finished inventory 2,740 3,140 2,940 2,740 2,740 Total Needs 15,440 16,840 18,640 17,440 59,540 Less: Beginning Finished Inventory 2,540 2,740 3,140 2,940 2,540 Required Production in units 12,900 14,100 15,500 14,500 57,000

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