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 30,000 Quarter 2 50,000 Quarter 3 25,000 Quarter 4 50,000 Each T-shirt is expected to sell for $22. 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 32 percent of the next quarter's sales demand. Selling and administrative expenses are budgeted at $60,000 per quarter plus 20 percent of total sales revenue. Required: 1. Determine budgeted sales revenue for each quarter. Budgeted Sales Revenue Quarter 1 Quarter 2 $ 546,000 $ 826,000 Quarter 3 $ 413,000 2. Determine budgeted cost of merchandise purchased for each quarter. Quarter 1 Budgeted Cost of Merchandise Purchased Quarter 2 $ 311,520 Quarter 3 $ 219,480 3. Determine budgeted cost of good sold for each quarter. Budgeted Cost of Goods Sold Quarter 1 $ 234,000 Quarter 2 $ 354,000 Quarter 3 $ 177,000 4. Determine selling and administrative expenses for each quarter. Quarter 2 Budgeted Selling and Administrative Expenses Quarter 1 $ 165,360 Quarter 3 $ 144,080 5. Complete the budgeted income statement for each quarter. RED CANYON T-SHIRT COMPANY Budgeted Income Statement Quarter 1 Quarter 2 Quarter 3 Budgeted Sales Revenue $ 546,000 $ 826,000 $ 413,000 Budgeted Cost of Goods Sold 234,000 354,000 177,000 $ Budgeted Gross Margin Budgeted Selling and Administrative Expenses $ 312,000 165,360 472,000 $ 210,160 236,000 144,080 Budgeted Net Operating Income $ 146,640 $ 261,840 $ 91,920