PAB-6 Preparing Operating Budgets for a Merchandising Firm [LO 8-5, 8-30. 1. g. h) Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwester United States. The sales manager has provided a sales forecast for the coming year, along wth the following information: Budgeted Unit Sales 02 1 32,000 Quarte 2 52.000 Quarter 25,000 Cu 4 52.000 Each T-shirt is expected to sell for $20 The purchasing manager buys the T-shirts for $8 each The company needs to have enough T-shirts on hand at the end of each quarter to fill 30 percent of the next quane's sales demand, Soling and administrative expenses are budgeted at $64,000 per quarter plus 16 percent of total sales revenue Required: 1. Determine budgeted sales revenue for each quarter Quarter 1 Quarter 2 Quarter 3 Budgeted Sales Revenue 2. Determine budgeted cost of merchandise purchased for each quarter Quarter 1 Quarter 2 Budgeted Cost of Merchandise Purchased 3. Determine budgeted cost of good sold for each quarter Quartet Quarter 2 Quarter Budited Cost of Goods Sold 4. Determine selling and administrative expenses for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Selling and Administrative Expenses 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