The marketing department of Jessi Corporation has submitted the following sales
ID: 2530830 • 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 $27 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 $73,800.
The company expects to start the first quarter with 2,560 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 2,760 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.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted unit sales 12,800 13,800 15,800 14,800Explanation / Answer
Solution 1:
Q1
Q2
Q3
Q4
Total
Budgeted Sales (In Units)
12800
13800
15800
14800
57200
Expected Selling Price per unit
27
27
27
27
27
Budgeted Sales (In Dollars)
345,600
372,600
426,600
399,600
1,544,400
Solution 2:
Calculation of Expected cash Collection Quarter wise and Whole Year
Expected Cash Collection
Q1
Q2
Q3
Q4
Total
Opening Accounts Receivable
73,800
73,800
1st Quarter Sales
224,640
103,680
328,320
2nd Quarter Sales
242,190
111,780
353,970
3rd Quarter Sales
277,290
127,980
405,270
4th Quarter Sales
259,740
259,740
Total
298,440
345,870
389,070
387,720
1,421,100
Working Note:
Solution 3:
Production in units of finished goods for each quarter of the fiscal year and for the year as a whole:
Q1
Q2
Q3
Q4
Total
Closing Inventory
2,760
3,160
2,960
2,760
2760
Add: Sales
12,800
13,800
15,800
14,800
57,200
Less: Opening Inventory
2,560
2,760
3,160
2,960
2,560
Production (in units)
13,000
14,200
15,600
14,600
57,400
Working Note:
Q1
Q2
Q3
Q4
Total
Budgeted Sales (In Units)
12800
13800
15800
14800
57200
Expected Selling Price per unit
27
27
27
27
27
Budgeted Sales (In Dollars)
345,600
372,600
426,600
399,600
1,544,400
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.