Question
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 | 31,000 | 51,000 | 25,500 | 51,000 | |||
Each T-shirt is expected to sell for $21.
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 31 percent of the next quarters sales demand.
Selling and administrative expenses are budgeted at $62,000 per quarter plus 18 percent of total sales revenue.
Required: 1. Determine budgeted sales revenue for each quarter.
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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.
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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.
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