The marketing department of Jessi Corporation has submitted the following sales

Question

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

The selling price of the company’s product is $18 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% 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 $72,000.

    The company expects to start the first quarter with 1,785 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 1,985 units.

Complete the company's sales budget.

Complete the schedule of expected cash collections.

Prepare the company’s production budget for the upcoming fiscal year.

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

Explanation / Answer

1-a: Sales Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Budgeted unit sales               11,900               12,900               14,900               13,900               53,600 selling price per unit $                   18 $                   18 $                   18 $                   18 Total Sales $       2,14,200 $       2,32,200 $       2,68,200 $       2,50,200 $       9,64,800 1-b: Schedule of Expected cash collection: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Sales $       2,14,200 $       2,32,200 $       2,68,200 $       2,50,200 Collection of sales of: Beginning Accounts Receivable $           72,000 $           72,000 1st Quarter $       1,60,650 $           42,840 $       2,03,490 2nd Quarter $       1,74,150 $           46,440 $       2,20,590 3rd Quarter $       2,01,150 $           53,640 $       2,54,790 4th Quarter $       1,87,650 $       1,87,650 $       2,32,650 $       2,16,990 $       2,47,590 $       2,41,290 $       9,38,520 2) Production Budget: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Expcected Sales               11,900               12,900               14,900               13,900               53,600 Add desired ending inventory                 1,935                 2,235                 2,085 1985 Total Units available               13,835               15,135               16,985               15,885 Less Beginning inventory 1785                 1,935                 2,235                 2,085 Units to be produced               12,050               13,200               14,750               13,800               53,800

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