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: 1st Quarter 11,490 2nd Quarter 12,400 3rd Quarter 14,400 4th Quarter 13,408 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

Explanation / Answer

Sales Budget 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr year Budgeted units sales 11,400 12,400 14,400 13,400 51,600 Selling price per unit 13 13 13 13 13 Total sales 148200 161200 187200 174200 670800 Schedule of Expected Cash collection 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr year Beginning accounts receivable 71,000 71,000 1st Qtr sale 96330 44460 140790 2nd Qtr sale 104780 48360 153140 3rd Qtr sale 121680 56160 177840 4th Qtr sale 113230 113230 Total cash collection 167,330 149240 170040 169390 656,000 Production Budget 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr year budgeted unit sales 11,400 12,400 14,400 13,400 51,600 Add Ending invnetory 1860 2160 2010 1,910 1,910 total needs 13,260 14,560 16,410 15,310 53,510 less opening inventory -1710 -1,860 -2,160 -2,010 -1,710 Required production in units 11,550 12,700 14,250 13,300 51,800

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