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We were unable to transcribe this imageThe selling price of the company's product is $29 per...

Question:

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The selling price of the companys product is $29 per unit. Management expects to collect 65% of sales in the quarter in whic
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We were unable to transcribe this image
The selling price of the company's product is $29 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 $74,200. The company expects to start the first quarter with 2.600 units in finished goods inventory Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,800 units. Required: 1. Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole. 2. Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole. 3. Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the expected thash collections for each quarter of the fiscal year and for the year as a whole 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Total cash collections ( Required 1 Required 3 >
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Answers

Solution:

Solution 1) Calculation of Estimated Sales for each quarter of the fiscal year and for the year as a whole:

Quarter

I

II

III

IV

Budgeted Unit Sales

13,000

14,000

16,000

15,000

Selling Price Per Unit $

29.00

29.00

29.00

29.00

Total Sales $ = Budgeted Unit Sales x Selling Price Per Unit $

3,77,000.00

4,06,000.00

4,64,000.00

4,35,000.00

Solution 2) Calculation of Expected Cash collection for each quarter of the fiscal year and for the year as a whole:

Quarter

I

II

III

IV

Total Sales $

3,77,000.00

4,06,000.00

4,64,000.00

4,35,000.00

Collection in the Quarter of Sales $ = 65% of Sales (A)

2,45,050.00
(0.65 * 377,000)

2,63,900.00

(0.65 * 406,000)

3,01,600.00 (0.65 * 464,000)

2,82,750.00 (0.65 * 435,000)

Collection of the Balance 35% in the following Quarter of the quarter of sales (B)

74,200.00
(Given)

1,13,100.00

(0.3 * 377,000)

1,21,800.00

(0.3 * 406,000)

1,39,200.00

(0.3 * 464,000)

Expected Cash Collection $ = (A)+ (B)

3,19,250.00

3,77,000.00

4,23,400.00

4,21,950.00

Solution 3) Calculation of required production in units of finished goods for each quarter of the fiscal year and for the year as a whole:

Quarter

I

II

III

IV

Budgeted Unit Sales (Units)

13,000

14,000

16,000

15,000

Opening Stock of Inventory (Units) = Closing Stock of the previous quarter

2,600

(Given)

2,800

3,200

3,000

Closing Stock of Inventory (Units) = 20% of Next quarter sales

2,800

(0.2 * 14,000)

3,200

(0.2 * 16,000)

3,000

(0.2 * 15,000)

2,800

(Given)

Units of Finished Goods to be produced (Units) = Budgeted Unit Sales (Units) - Opening Stock of Inventory (Units) + Closing Stock of Inventory (Units)

13,200

14,400

15,800

14,800

.

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