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Exercise 8-14 Sales and Production Budgets [LO8-2, LO8-3] The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year

Exercise 8-14 Sales and Production Budgets [LO8-2, LO8-3]

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 12,500 13,500 15,500 14,500

The selling price of the companys product is $24 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 $73,200.

The company expects to start the first quarter with 2,500 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarters budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,700 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.

Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Total sales $300,000 $324,000 $372,000 $348,000 $1,344,000

Requirement 2

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Total cash collections

Requirement 3

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Required production in units

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