Exercise 9-2 Sales and Production Budget [LO2] Fortin Limited produces and sells a single product, a wearable LED light for runners and cyclists. The analytics group at Fortin Limited has developed the following estimates for unit sales in the upcoming year. Budgeted unit sales First Quarter 24,600 Required: 1-a. Prepare the company's sales budget. Budgeted unit sales Selling price per unit Total Sales Second Quarter 21,300 The light sells for $60 per unit and all sales are on account. 75% of sales are expected to be collected in the quarter of sale, with the remainder in the following quarter. Accounts receivable at the beginning of the quarter were $170,000 and will all be collected during the first quarter of the year. First Quarter At the end of the previous quarter there were 2,600 units in finished goods inventory. The desired ending finished goods inventory at the end of each quarter is 10% of the next quarter's budgeted sales. Management expects sales in the fourth quarter of the upcoming year to be the same as the first quarter of the following year. Third Quarter 20,600 Second Quarter Fourth Quarter 22,200 Third Quarter Fourth Quarter Year
Exercise 9-2 Sales and Production Budget [LO2] Fortin Limited produces and sells a single product, a wearable LED light for runners and cyclists. The analytics group at Fortin Limited has developed the following estimates for unit sales in the upcoming year. Budgeted unit sales First Quarter 24,600 Required: 1-a. Prepare the company's sales budget. Budgeted unit sales Selling price per unit Total Sales Second Quarter 21,300 The light sells for $60 per unit and all sales are on account. 75% of sales are expected to be collected in the quarter of sale, with the remainder in the following quarter. Accounts receivable at the beginning of the quarter were $170,000 and will all be collected during the first quarter of the year. First Quarter At the end of the previous quarter there were 2,600 units in finished goods inventory. The desired ending finished goods inventory at the end of each quarter is 10% of the next quarter's budgeted sales. Management expects sales in the fourth quarter of the upcoming year to be the same as the first quarter of the following year. Third Quarter 20,600 Second Quarter Fourth Quarter 22,200 Third Quarter Fourth Quarter Year
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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![Exercise 9-2 Sales and Production Budget [LO2]
Fortin Limited produces and sells a single product, a wearable LED light for runners and cyclists. The analytics group at Fortin Limited
has developed the following estimates for unit sales in the upcoming year.
Budgeted unit sales
First
Quarter
24,600
The light sells for $60 per unit and all sales are on account. 75% of sales are expected to be collected in the quarter of sale, with the
remainder in the following quarter. Accounts receivable at the beginning of the quarter were $170,000 and will all be collected during
the first quarter of the year.
Required:
1-a. Prepare the company's sales budget.
Budgeted unit sales
Selling price per unit
Total Sales
Second
Quarter
21,300
At the end of the previous quarter there were 2,600 units in finished goods inventory. The desired ending finished goods inventory at
the end of each quarter is 10% of the next quarter's budgeted sales. Management expects sales in the fourth quarter of the upcoming
year to be the same as the first quarter of the following year.
First
Quarter
Third Fourth
Quarter Quarter
20,600 22, 200
Second
Quarter
Third
Quarter
Fourth
Quarter
Year](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe69a499e-b081-4a08-acaa-9c7a9864cab2%2Fbc4fed9f-d2b0-449b-8278-9d8685a3b0c0%2Fxu852ls_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 9-2 Sales and Production Budget [LO2]
Fortin Limited produces and sells a single product, a wearable LED light for runners and cyclists. The analytics group at Fortin Limited
has developed the following estimates for unit sales in the upcoming year.
Budgeted unit sales
First
Quarter
24,600
The light sells for $60 per unit and all sales are on account. 75% of sales are expected to be collected in the quarter of sale, with the
remainder in the following quarter. Accounts receivable at the beginning of the quarter were $170,000 and will all be collected during
the first quarter of the year.
Required:
1-a. Prepare the company's sales budget.
Budgeted unit sales
Selling price per unit
Total Sales
Second
Quarter
21,300
At the end of the previous quarter there were 2,600 units in finished goods inventory. The desired ending finished goods inventory at
the end of each quarter is 10% of the next quarter's budgeted sales. Management expects sales in the fourth quarter of the upcoming
year to be the same as the first quarter of the following year.
First
Quarter
Third Fourth
Quarter Quarter
20,600 22, 200
Second
Quarter
Third
Quarter
Fourth
Quarter
Year
Transcribed Image Text:1-b. Prepare the schedule of expected cash collections.
Accounts receivable, beginning balance
1st Quarter sales
2nd Quarter sales
3rd Quarter sales
4th Quarter sales
Total cash collections
Budgeted unit sales
2. Prepare the company's production budget for the upcoming fiscal year.
Total units needed
FORTIN LIMITED
Schedule of Expected Cash Collections
First
Quarter
Required production
Second
Quarter
First
Quarter
FORTIN LIMITED
Production Budget
Second
Quarter
Third
Quarter
Third
Quarter
Fourth
Quarter
Fourth
Quarter
Year
Year
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