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):

The selling price of the company’s product is $16 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% 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 $71,600.

The company expects to start the first quarter with 1,755 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 1,955 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

1. Calculation the estimated sales for each quarter of the fiscal year and for the year as a whole. Perticulars Quarters 1 2 3 4 Total of year Budgeted unit sales 11700 12700 14700 13700 Selling Price per unit $16 per unit Estimated Sale per Quarter $187,200 $203,200 $235,200 $219,200 $844,800 ( Units sales*$16 per unit) (11700*$16) (12700*$16) (14700*$16) (11700*$16) 2.Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole. Perticulars Quarter 1 2 3 4 Total of Years Receivable at Beginning $71,600 Estimated Cash Collection $140,400 $189,840 $217,040 $211,440 75% , 20% in Next Qtr ($187200*75%) ($203200*75%+$187200*20%) ($235200*75%+$203200*20%) ($219200*75%+$235200*20%) Total Cash collection $212,000 $189,840 $217,040 $211,440 $830,320 3.Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole Perticulars Quarter 1 2 3 4 Total of Years Budgeted Unit Sales 11700 12700 14700 13700 52800 Add: Inventory at end 1905 2205 2055 1955 (12700*15%) (14700*15%) (13700*15%) (given) Less: Inventory at the Beginning 1755 1905 2205 2055 (given) (1st qtr End Inventory) (2nd qtr End Inventory) (3rd qtr End Inventory) Production Required 11850 13000 14550 13600 53000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.