PA8-6 Preparing Operating Budgets for a Merchandising Firm [LO 8-5, 8-3a, f, g, h] 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: Budgeted Unit Sales Quarter 1 48,000 Quarter 2 76,000 Quarter 3 38,000 Quarter 4 76,000 . Each T-shirt is expected to sell for $23. The purchasing manager buys the T-shirts for $9 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 33 percent of the next quarter's sales demand. Selling and administrative expenses are budgeted at $96,000 per quarter plus 12 percent of total sales revenue. Required: 1. Determine huidnoted along 5. Complete the budgeted income statement for each quarter. RED CANYON T-SHIRT COMPANY Budgeted Income Statement Quarter 1 Quarter 2 Quarter 3 $ 1,104,000 $ 1,748,000 $ 874,000 432,000 684,000 342,000 Budgeted Sales Revenue Budgeted Cost of Goods Sold Budgeted Gross Margin Budgeted Selling and Administrative Expenses 228,480 305,760 200,880 Budgeted Net Operating Income