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: Quarter 1 Quarter 2 Quarter 3 Quarter 4 33, 53,000 26,500 53,000 Budgeted unit sales • Each T-shirt is expected to sell for $19. . 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 29 percent of the next quarter's sales demand . Selling and administrative expenses are budgeted at $66,000 per quarter plus 15 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 cost of merchandise purchased for each quarter. Quarter 1 Quarter 2 Quarter 3 < Prey 7 of 7 Next >

Answer 1

1) Budgeted sale revenue
		quarter1	quarter2	quarter3
Budgeted unit sale		33000	53000	26500
selling price per unit		19	19	19
Budgeted sale revenue		627000	1007000	503500
2) budgeted cost of merchandise purchased
		quarter1	quarter2	quarter3
Budegeted sale unit		33000	53000	26500
add: desired ending inventory		15370	7685	15370
Total required		48370	60685	41870
less: opening inventory		9570	15370	7685
budgeted purchase		38800	45315	34185
cost per unit		8	8	8
budgeted cost of merchandise purchased		310400	362520	273480
3)budgeted Cost of goods sold
		quarter1	quarter2	quarter3
budgeted sale units		33000	53000	26500
cost per unit		8	8	8
budgeted Cost of goods sold		264000	424000	212000
4) selling & administrative expenses
		quarter1	quarter2	quarter3
Fixed selling expenses		66000	66000	66000
variable selling expenses@15%		94050	151050	75525
Budgeted selling & administrative exp		160050	217050	141525
5) Budgeted income statement
		quarter1	quarter2	quarter3
sale revenue		627000	1007000	503500
less: cost of goods sold		264000	424000	212000
gross margin		363000	583000	291500
less: expenses
selling & administartive		160050	217050	141525
Net income		202950	365950	149975

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