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 36,000 Quarter 2 56,000 Quarter 3 28,000 Quarter 4 56,000 Budgeted Unit Sales

• Each T-shirt is expected to sell for $11.
• The purchasing manager buys the T-shirts for $4 each.
• The company needs to have enough T-shirts on hand at the end of each quarter to fill 21 percent of the next quarter’s sales demand.
• Selling and administrative expenses are budgeted at $72,000 per quarter plus 10 percent of total sales revenue.

Answer 1

Solution Particulars Budgeted Unit Sales (Given) Quarter 1 Quarter 2 Quarter 3 Quarter 4 2800056000 36000 56000 Selling Price per unit 1. Budgeted Sales Revenue Purchase Price per unit (Given) 396000 616000308000 4 4 4 2. Budegetd Cost of Material Purchased Sales units Add: Closing Stock @21% of next quarter Sales Less: Opening Stock (Previous Quarter Closing Stock) Budgeted Purchase units Budgeted Cost of Purchaes 28000 11200 5600 0 188800 201600134400 36000 11200 0 47200 56000 5600 11200 504003360 f-d*e a* d 3. Budgeted Cost of Goods Sold Sale units*Cost) 144000 224000112000 4. Selling & Admin Overheads Variable @ 10% of sales revenue Fixed (Given) Selling & Admin Overheads 6160030800 200072000 111600 133600 102800 39600 72000 5. Budgeted Income Statement Budgeted Sales Revenue Less: Budgeted Cost of Goods Sold Budgeted Gross Margin Less: Budgeted Selling & Admin Overheads Budgeted Net Operating Income 396000616000308000 144000 224000112000 252000392000196000 111600 133600102800 140400 258400 93200