Sales Budget:
1st Quarter: 12,000 units x $18.00 = $216,000
2nd Quarter: 14,000 units x $18.00 = $252,000
3rd Quarter: 13,000 units x $18.00 = $234,000
4th Quarter: 11,000 units x $18.00 = $198,000
Schedule of Expected Cash Collections:
1st Quarter: $216,000 x 65% = $140,400 + $70,200 = $210,600
2nd Quarter: $252,000 x 30% = $75,600
3rd Quarter: $234,000 x 5% = $11,700
4th Quarter: $0
Production Budget:
1st Quarter: 12,000 units + 1,650 units (beginning inventory) - 1,800 units (ending inventory) = 12,850 units
2nd Quarter: 14,000 units + 1,800 units (beginning inventory) - 2,100 units (ending inventory) = 14,700 units
3rd Quarter: 13,000 units + 2,100 units (beginning inventory) - 1,950 units (ending inventory) = 13,150 units
4th Quarter: 11,000 units + 1,950 units (beginning inventory) - 1,850 units (ending inventory) = 11,100 units
The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Units to be produced
12,000
14,000
13,000
11,000
The selling price of the company's product is $18.00 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 $70,200. The company expects to start the first quarter with 1,650 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 1,850 units.
Prepare the company's sales budget and schedule of expected cash collections.
Prepare the company's production budget for the upcoming fiscal year.
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