Exercise 7-14 Sales and Production Budgets [LO7-2, LO7-3]

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
Budgeted unit sales	11,300	12,300	14,300	13,300

The selling price of the companys product is $12 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 $70,800.

The company expects to start the first quarter with 1,695 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarters budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,895 units.

Required:

1-a.	Complete the company's sales budget.

1-b.	Complete the schedule of expected cash collections.

2.	Prepare the companys production budget for the upcoming fiscal year.