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	50,000	80,000	40,000	80,000

Each T-shirt is expected to sell for $25.

The purchasing manager buys the T-shirts for $10 each.

The company needs to have enough T-shirts on hand at the end of each quarter to fill 35 percent of the next quarters sales demand.

Selling and administrative expenses are budgeted at $100,000 per quarter plus 15 percent of total sales revenue.

Required:

1. Determine budgeted sales revenue for each quarter.

	Quarter 1	Quarter2	Quarter3
Budgeted Sales Revenue

2. Determine budgeted cost of merchandise purchased for each quarter.

	Quarter 1	Quarter 2	Quarter 3
Budgeted Cost of Merchandise Purchased

3. Determine budgeted cost of good sold for each quarter.

	Quarter 1	Quarter 2	Quarter 3
Budgeted Cost of Goods Sold

4. Determine selling and administrative expenses for each quarter.

	Quarter1	Quarter 2	Quarter 3
Budgeted Selling and Administrative Expenses

5. Complete the budgeted income statement for each quarter.

RED CANYAN T-SHIRT COMPANY

BUDGETED INCOME STATEMENT

	Quarter 1	Quarter 2	Quarter 3
Budgeted Gross Magin
Budgetes Net Operating Income

Different options to pick for the left columns:

- Budgeted Contribution Margin

- Budgeted Cost of Goods Sold

- Budgeted Interest Expense

- Budgeted Sales Returns and Allowances

- Budgeted Sales Revenue

- Budgeted Selling and Administrative Expenses