Question

PA8-6 Preparing Operating Budgets for a Merchandising Firm (LO 8-5, 8-3a, f, g, h] 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 33.000 Quarter 2 53.000 Quarter 3 26.500 Quarter 4 5 3,000 Budged Unt Sales • Each T-shirt is expected to sell for $19. - The purchasing manager buys the T-shirts for 58 each • The company needs to have enough T-shirts on hand at the end of each quarter to il 29 percent of the next quarter's sales demand . Selling and administrative expenses are budgeted at $60,000 per quarter plus 15 percent of total sales revenue Required: 1. Determine budgeted sales revenue for each quarter Quarter 1 Quarter 2 Quarter 3 Budgeted Sales Revenue

Answer 1

Solution to the question is as per following images

Solution : Requirement I Budgeted Scales Revende Amount in & Particcolars quarter I quarter 2 Quarte 3 Quarter 4 Budgeteel Scule 38000 S8000 26500 SOCO els b) Sales Revenue 62 7000 |foo7000 503500 11007000 $ 11 x (g) Requirement 2 Budgeted Cost of merchandise purchased for each quarter Particulare Quarte I Quarter 2 Quarter 3 Quartor 4 9 Budgetey Units - 33000 53000 26500 53000 - Sold i (b) opening stock - (15370) (7685) (15370) c) closing stock 15370 7685 15370 d) Badgeted units 48370 45315 3 4185 37630 Purchased egudgeted cost 386960 962520 27348 301040 of merchandise Purchase $8 x cao) Note o It coas Goods at assumed that the begining opening stock of couarter I of is "Nil" Scanned with CamScanner

Requirement : Bredgeted cost of goods sold Amount in $ Quarter 2 Quarter 3 Quarter 4 cQuarter Particulars alunite Purchased b) orening Stock I closing stock - d) with sold og e cost of Goed's cold ( $ 8 x(d)) 48370 45315 / 34185 37630 - 15370 7685 15370 15370) 685) (15370) 33000 53000 26500 53000 264000 424000 212000 424 000 Requirement 4 administrative Badgeted selling and Expenses Amount in & Quorter I Partecelars Quartera o carter 3 Quartera a Sales Revenue 627000 100 1000 503500 100 7000 bl nudgeted selling 66000 66000 66000oCoo and administrative Expense dis1.of call 94000 15loso 75525 151050 a to tol budgeted selling cooro 245100 169575 245100 Gor administrative Expenses (btc) Car

Regeirement s Red CANYON T-shirt Company Budgeted income statement Amount in & Quarter I guorter & Quarter 3 Quartera particules sales Revenge 6278 1007000503 Soo 107000 Cort of sold Good 264000 424000 212000 426000 583000 245100 Budgeted Gross Mongin 363000 583000 291500 Budgeted selling and 16oo5o 245 100 169575 administratie Expenie Badgeted Netoperating income 202950 337900 121925 337900 Scanned with CamScanner