Exercise 8-14 (Algo) Sales and Production Budgets [LO8-2,LO8-3]
The marketing department of Jessi Corporation has submitted thefollowing sales forecast for the upcoming fiscal year (all salesare on account):
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter |
| Budgeted unit sales | 11,300 | 12,300 | 14,300 | 13,300 |
|
The selling price of the company’s product is $12 per unit.Management expects to collect 75% of sales in the quarter in whichthe sales are made, 20% in the following quarter, and 5% of salesare expected to be uncollectible. The beginning balance of accountsreceivable, all of which is expected to be collected in the firstquarter, is $70,800.
The company expects to start the first quarter with 1,695 unitsin finished goods inventory. Management desires an ending finishedgoods inventory in each quarter equal to 15% of the next quarter’sbudgeted sales. The desired ending finished goods inventory for thefourth quarter is 1,895 units.
Required:
1. Calculate the estimated sales for each quarter of the fiscalyear and for the year as a whole.
2. Calculate the expected cash collections for each quarter ofthe fiscal year and for the year as a whole.
3. Calculate the required production in units of finished goodsfor each quarter of the fiscal year and for the year as awhole.
