ISE 9-2 Sales and Production Budget ILO2] The marketing Rg department of Graber

Question

ISE 9-2 Sales and Production Budget ILO2] The marketing Rg department of Graber Corporation has submitted the following sales forecast for the upcoming fiscal year. First Quarter Second Quarter Third Quarter Fourth Quarter Budgeted unit sales.. 16.000 15,000 14000 15,000 The selling price of the company's product is $22.00 per unit. Management expects to collect 75% of sales in the quarter in which the salesare made and 20% in the following quarter, and % fsales are expected to be uncollectible. The beginning balance of accounts receivable all 5 of which is expected to be collected in the first quarter, is $66.000.

Explanation / Answer

1.

Sales Budget

Collection pattern = 75% in the quarter in which sales are made, 20% in the following quarter

Schedule of expected cash collections

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2.

Ending fininshed goods in each quarter = 20% of the next Quarter's budgeted sales

Production in each Quarter = Budgeted sales + Ending finished goods - Beginning finished goods

Production Budget

First Quarter Second Quarter Third Quarter Fourth Quarter Budgeted unit sales (a) 16,000 15,000 14,000 15,000 Selling price per unit (b) 22 22 22 22 Sales (c) = (a*b) 352,000 330,000 308,000 330,000

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