The marketing department of Jessi Corporation has submitted the following sales
ID: 2545688 • Letter: T
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 $21 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 $72,600.
The company expects to start the first quarter with 2,440 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 2,640 units.
Compute the company’s total sales.
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
SALES BUDGET Q-1 Q-2 Q-3 Q-4 Total Budgeted Sales units 12,200 13,200 15,200 14,200 54,800 Selling price per unit 21 21 21 21 21 Budgeted Sales in $ 256,200 277,200 319,200 298,200 1,150,800 EXPECTED CASH COLLECTIONS Q-1 Q-2 Q-3 Q-4 Total Beginning Accounts receivable 72,600 72,600 Quarter-1 sales 166,530 89670 256,200 Quarter-2 Sales 180180 97020 277,200 Quarter-3 Sales 207,480 111720 319,200 Quarter-4 Sales 193830 193,830 Total Cash Collections 239,130 269,850 304,500 305,550 119030 PRODUCTION BUDGET Q-1 Q-2 Q-3 Q-4 Total Budgeted Sales Units 12,200 13,200 15,200 14,200 54,800 Add: Desired Ending Finished inventory 2,640 3,040 2,840 2,640 2,640 Total Needs 14,840 16,240 18,040 16,840 57,440 Less: Beginning Finished Inventory 2,440 2,640 3,040 2,840 2,440 Required Production in units 12,400 13,600 15,000 14,000 55,000
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