Exercise 7-14 Sales and Production Budgets [LO7-2, LO7-3] The marketing departme

Question

Exercise 7-14 Sales and Production Budgets [LO7-2, LO7-3]

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 $22 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 $72,800.

    The company expects to start the first quarter with 2,460 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 2,660 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

1-b

Schedule of collections:

2

Production budget:

*Hope above explanation helps, please comment if further explanation is required. Your rating is appreciated*

Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Sales in units          12,300          13,300          15,300          14,300 Selling price per unit                  22                  22                  22                  22 Sales in dollars        270,600        292,600        336,600        314,600

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