Bus 630 Week 4

Master Budget Exercises

Timothy Vallin

BUS 630 Managerial Accounting

Instructor: Mark Taylor

June 17, 2012

Sales and Production Budgets (8-12): 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 |

Units to be produced | 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 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.

* Prepare the company's sales budget and schedule of expected cash collections.

* Prepare the company's production budget for the upcoming fiscal year.

Jessi Corp. Sales Budget

| 1 | 2 | 3 | 4 | Total |

Budgeted Unit Sales | 11,000 | 12,000 | 14,000 | 13,000 | 50,000 |

Selling Price per Unit | X18 | X18 | X18 | X18 | X18 |

Total Sales | 198,000 | 216,000 | 252,000 | 234,000 | 900,000 |

Schedule of Collections Per Quarter

Acct Rec. Beg | 70,200 | | | | 70,200 |

Quarter 1 | 128,700 | 59,400 | | | 188,100 |

Quarter 2 | | 140,400 | 64,800 | | 205,200 |

Quarter 3 | | | 163,800 | 70,200 | 234,000 |

Quarter 4 | | | | 152,100 | 152,100 |

Total Collected | 198,900 | 199,800 | 228,600 | 222,300 | 849,600 |

Jessi Corp. Production Budget

Budgeted Unit Sales | 11,000 | 12,000 | 14,000 | 13,000 | 50,000 |

Desired Ending Inventory | +1,800 | +2100 | +1,950 | +1,850 |...