PA8-6 (Algo) Preparing Operating Budgets for a Merchandising Firm [LO 8-5) Red Canyon T-shirt Company operates a chain of T shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted unit sales 39,000 59,000 29,5ee 59,000 Each Tshirt is expected to sell for $14. . The purchasing manager buys the T-shirts for $6 each The company needs to have enough T-shirts on hand at the end of each quarter to fill 24 percent of the next quarter's sales demand Selling and administrative expenses are budgeted at $78.000 per quarter plus 16 percent of total saleh revenue, Required: 1. Determine budgeted sales revenue for quarters 1, 2 and 3. 2. Determine budgeted cost of merchandise purchased for quarters 1, 2 and 3. 3. Determine budgeted cost of good sold for quarters 1, 2 and 3. 4. Determine selling and administrative expenses for quarters 1, 2 and 3. 5. Complete the budgeted income statement for quarters 1.2 and 3. Required 1 Required 2 Required 3 Required 4 Required 5 Determine budgeted cost of merchandise purchased for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Cost of Merchandise Purchased Required 1 Required 2 Required 3 Required 4 Required 5 Determine budgeted cost of good sold for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Cost of Goods Sold Required 1 Required 2 Required 3 Required 4 Required 5 Determine selling and administrative expenses for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Selling and Administrative Expenses Required 1 Required 2 Required 3 Required 4 Required 5 Complete the budgeted income statement for each quarter. RED CANYON T-SHIRT COMPANY Budgeted Income Statement Quarter 1 Quarter 2 Quarter 3 Budgeted Gross Margin Budgeted Net Operating Income