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Sales and Production Budgets - Jessi Corporation

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The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account)

Budgeted Unit sales

1st Quarter
11,000
2nd quarter
12,000
3rd quarter
14,000
4th quarter
13,000

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 in are expected to be uncollectable. 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 to equal 15% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850 Units.

Required
1. Prepare the company's sales budget and schedule of expected cash allocations.
2. Prepare the company's production budget for the upcoming fiscal year.

Please show all calculations as I need to be able to solve additional problems of this nature. Thanks!

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Solution Summary

Your tutorial in Excel (attached) contains a sales budget, a production budget, and a cash collections budget. The cells are linked so you have a template for other similar problems. Click in cells to see computations.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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