The GBCoffee Company roasts and sells high quality certified sustainable coffee beans. The final one pound bags of roasted whole coffee beans has two direct materials coffee beans and packaging. GBCoffee is preparing budgets for the fourth quarter ending December 31, 2019. For each requirement below prepare budgets by month for October, November, and December, and a total budget for the quarter.

1. The previous years sales for the corresponding period were:

October 50,000 bags

November 55,000 bags

December 90,000 bags

January 75,000 bags

February 60,000 bags

The company expects the above volume of coffee sales to increase by 8% for the period October 2019 February 2020. The budgeted selling price for 2019 is $19.50 per bag. The company expects 35% of its sales to be cash (COD) sales. The remaining 65% of sales will be made on credit.

1. Variable selling and administrative expenses are $1.20 per bag of coffee sold. Fixed selling and administrative expenses are $60,000 per month. These costs are not itemized, i.e., the budget has only two line items variable operating expenses and fixed operating expenses. Prepare an Operating Expenses budget.

Operating Expense Budget Assumptions::