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 coming year, along with the following information: information: a states. The sales manager Budgeted unit sales Quarter 1 31,000 31,000 Quarter 2 51.000 51,000 Quarter 3 25.se 25,500 Quarter 4 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 quarter's 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 quarters 1, 2 and 3. 2. Determine budgeted cost of merchandise purchased for quarters 1. 2. and 3. 3. Determine budgeted cost of good sold for quarters 1, 2, and 3. 4. Determine selling and administrative expenses for quarters 1. 2. and 3 5. Complete the budgeted income statement for quarters 1, 2, and 3. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Determine budgeted sales revenue for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Sales Revenue Required 2 >

Answer 1

1)				Q1	Q2	Q3	Q4
	Units sales			31000	51000	25500	51000
	Selling price per unit			$           21.00	$              21.00	$           21.00	$              21.00
	Budgeted sales revenue			$ 651,000.00	$ 1,071,000.00	$ 535,500.00	$ 1,071,000.00

2)				Q1	Q2	Q3	Q4
	Units sales			31000	51000	25500	51000
Add:	Desired Ending Inventory			15810	7905	15810
Less:	Beginning Inventory			9610	15810	7905
	Purchase required			37200	43095	33405
	Purchase cost per unit			$             8.00	$             8.00	$             8.00
	Cost of merchandise purchase			$ 297,600.00	$ 344,760.00	$ 267,240.00

3)		Q1	Q2	Q3
	Beginning Inventory	9610	15810	7905
Add:	Purchase	37200	43095	33405
Less:	Ending Inventory	15810	7905	15810
	Units sold	31000	51000	25500
	Purchase cost per unit	$             8.00	$             8.00	$             8.00
	Cost of Goods sold	$ 248,000.00	$ 408,000.00	$ 204,000.00

4)				Q1	Q2	Q3
	Budgeted sales revenue			$ 651,000.00	$ 1,071,000.00	$ 535,500.00
	Variable S&A expenses (18%)			$ 117,180.00	$    192,780.00	$   96,390.00
	Fixed S&A expenses			$   62,000.00	$      62,000.00	$   62,000.00
	Total S&A expenses			$ 179,180.00	$    254,780.00	$ 158,390.00

5)

	Income Statement				Q1	Q2	Q3
	Budgeted Sales Revenue				$ 651,000.00	$ 1,071,000.00	$ 535,500.00
Less:	Budgeted Cost of Goods sold				$ 248,000.00	$     408,000.00	$ 204,000.00
	Gross Margin				$ 403,000.00	$     663,000.00	$ 331,500.00
Less:	Budgeted S&A Expenses				$ 179,180.00	$     254,780.00	$ 158,390.00
	Budgeted Net Operating Income				$ 223,820.00	$     408,220.00	$ 173,110.00

Is this okay?