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 QuarterBudgeted unit sales ............................ 11,000 12,000 14,000 13,000The selling price of the company’s product is $18.00 per unit. Management expects to collect 65% of salesin the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to beuncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in thefi rst 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.Required:1. Prepare the company’s sales budget and schedule of expected cash collections.2. Prepare the company’s production budget for the upcoming fiscal year.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The marketing department of Jessi Corporation has submitted the following sales
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Budgeted unit sales ............................ 11,000 12,000 14,000 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 are expected to be
uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the
fi rst 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.
Required:
1. Prepare the company’s sales budget and schedule of expected cash collections.
2. Prepare the company’s production budget for the upcoming fiscal year.
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