The marketing department of Jessi Corporation has submitted

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): lst Quarter 2nd Quarter 3rd Quarter 4th Quar Budgeted unit sales 12,800 13,800 15, 800 14,800 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.

Solution

SALES BUDGET Q1 Q2 Q3 Q4 TOTAL Budgeted Sales units 12,800 13,800 15,800 14,800 57,200 Selling price per unit 27 27 27 27 27 Total Sales 345,600 372,600 426,600 399,600 1,544,400 EXPECTED CASH COLLECTIONS Q1 Q2 Q3 Q4 Total Beginning Accounts receivable 73,800 73,800 Q1 Sales 224,640 103680 328,320 Q2 Sales 242190 111780 353,970 Q3 Sales 277,290 127,980 405,270 Q4 Sales 259,740 259,740 Total Cash Collections 298,440 345,870 389,070 387,720 1,421,100 PRODUCTION BUDGET Q1 Q2 Q3 Q4 Total Budgeted Sales Units 12,800 13,800 15,800 14,800 57,200 Add: Desired Ending Finished inventory 2,760 3,160 2,960 2,760 2,760 Total Needs 15,560 16,960 18,760 17,560 59,960 Less: Beginning Finished Inventory 2,560 2,760 3,160 2,960 2,560 Required Production in units 13,000 14,200 15,600 14,600 57,400