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 $11 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 $70,600.

The company expects to start the first quarter with 1,680 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 1,880 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 11,200 12,200 14,200 13,200

Explanation / Answer

Answer:- 1)

2)-

3)-

Jessi Corporation Calculation of estimated sales for each quarter & year as a whole Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Whole Year Budgeted unit sales (a) 11200 12200 14200 13200 50800 Selling price per unit (b) $11 per unit $11 per unit $11 per unit $11 per unit Estimated sales $ (c=a*b) 123200 134200 156200 145200 558800

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