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	39,000	59,000	29,500	59,000

Each T-shirt is expected to sell for $14.

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 24 percent of the next quarters sales demand.

Selling and administrative expenses are budgeted at $78,000 per quarter plus 16 percent of total sales revenue.

Required:

1. Determine budgeted sales revenue for each quarter.

Budgeted Sales Revenue-

Quarter 1

Quarter 2

Quarter 3

2.Determine budgeted cost of merchandise purchased for each quarter Budgeted Cost of merchandise purchased- Quarter 1 Quarter 2 Quarter 3

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

Budgeted cost of goods sold-

Quarter 1

Quarter 2

Quarter 3

4.Determine selling and administrative expenses for each quarter. Budgeted sales and administrative expenses- Quarter 1 Quarter 2 Quarter 3

5.

Complete the budgeted income statement for each quarter.

RED CANYON T-SHIRT COMPANY
Budgeted Income Statement
	Quarter 1	Quarter 2	Quarter 3
Budgeted Gross Margin
Budgeted Net Operating Income

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