Exercise 9-14 Sales and Production Budgets [LO9-2, LO9-3]

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	12,000	13,000	15,000	14,000

The selling price of the companys product is $19 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 $72,200.

The company expects to start the first quarter with 2,400 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 2,600 units.

Required:

1-a. Compute the companys total sales.

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

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