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	30,000	50,000	25,000	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 quarters 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.

	Quarter 1	Quarter 2	Quarter 3
Budgeted Unit Revenue

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

	Quarter 1	Quarter 2	Quarter 3
Budgeted Costs of Merchandise Purchased

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

	Quarter 1	Quarter 2	Quarter 3
Budgeted Costs 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 Costs of Goods Sold
Budgeted Sales Revenue
Budgeted Gross Margin
Budgeted selling and administrative expenses
Budgeted Net Operating Income