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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
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 | 40,000 | 60,000 | 30,000 | 60,000 | |||
Each T-shirt is expected to sell for $15. | |
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 25 percent of the next quarters sales demand. | |
Selling and administrative expenses are budgeted at $80,000 per quarter plus 10 percent of total sales revenue. |
Required: | |
1. | Determine budgeted sales revenue for each quarter. |
2. | Determine budgeted cost of merchandise purchased for each quarter. |
3. | Determine budgeted cost of good sold for each quarter. |
4. | Determine selling and administrative expenses for each quarter. |
5. | Complete the budgeted income statement for each quarter. |
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