Jesse Corporation Executive Summary
The marketing department of Jesse 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 …show more content…
Q1 Sales = $11,000
Collections in Q1 = $11,000 x 65% = $7,150
Collections in Q2 = $11,000 x 30% = $3,300
Q2 Sales = $12,000
Collections in Q2 = $12,000 x 65% = $7,800
Collections in Q3 = $12,000 x 30% =$3,600
Q3 Sales = $14,000
Collections in Q3 = $14,000 x 65% = $9,100
Collections in Q4 = $14,000 x 30% = $4,200
Q4 Sales
Collections in Q4 = $13,000 x 65% = $8,450
Schedule of Expected Cash Collections
Quarter 1 2 3 4 Year
Beginning AR $70,200 $70,200
Q1 Sales 7,150 $3,300 10,450
Q2 Sales 7,800 $3,600 11,400
Q3 Sales 9,100 $4,200 …show more content…
Each unit requires 2 pounds of raw material that costs $1.40 per pound. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 1,500 pounds. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.60 direct labor-hours and direct labor-hour workers are paid $14.00 per hour.
• Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year.
Quarter 1 2 3
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 …show more content…
Q1 Sales = $11,000
Collections in Q1 = $11,000 x 65% = $7,150
Collections in Q2 = $11,000 x 30% = $3,300
Q2 Sales = $12,000
Collections in Q2 = $12,000 x 65% = $7,800
Collections in Q3 = $12,000 x 30% =$3,600
Q3 Sales = $14,000
Collections in Q3 = $14,000 x 65% = $9,100
Collections in Q4 = $14,000 x 30% = $4,200
Q4 Sales
Collections in Q4 = $13,000 x 65% = $8,450
Schedule of Expected Cash Collections
Quarter 1 2 3 4 Year
Beginning AR $70,200 $70,200
Q1 Sales 7,150 $3,300 10,450
Q2 Sales 7,800 $3,600 11,400
Q3 Sales 9,100 $4,200 …show more content…
Each unit requires 2 pounds of raw material that costs $1.40 per pound. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 1,500 pounds. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.60 direct labor-hours and direct labor-hour workers are paid $14.00 per hour.
• Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year.
Quarter 1 2 3