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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):
Units to be produced
11,000 — 1st quarter
12,000— 2nd quarter
14,000— 3rd quarter
13,000– 4th quarter
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 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 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:
Prepare the company’s sales budget and schedule of expected cash collections.
Prepare the company’s production budget for the upcoming fiscal year.
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