Question

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): 1st Quarter 2nd Quarter 11,400 12,400 3rd Quarter 4th Quarter 14,400 13,400 Budgeted unit sales The selling price of the company's product is $13 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 $71,000. The company expects to start the first quarter with 1,710 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 1,910 units. Required: 1. Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole. 2. Calculate 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.

Answer 1

Por Ostimated sales as a cshole year Computation of e each quearter and Duarters st yes +h 2 d Gudgeted onit Sales tI400 11240o 14400 134Oo SIG00 $13 /L48260 161200 187200174200670800 $13 13 Sellang price Sales vatue $13 13 2 Computation af expected Cash colleetiohs S tes nd 4year 2 Beefinning accaunts receivable 65 6P Lales collected 0the quarter Pnuhie Sales ara ade 30 aP Sales allectcd ollocwing auarte lood 46330 (04780 12168d 3230 44H604836056160 2pected cash ih 161330 9240o040 6939065c00

3 Compution ap production budget puarter year Salesan certs 4closing inventa 1860 apening nventor10) 144400 3400 2400 2010 110 2160 860) 2160)(2010) 1400 (2700 4256 3300 51800 production 1550