no more questions valuc: 4.00 points PA8-6 Preparing Operating Budgets for a Mer

Question

no more questions valuc: 4.00 points 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 1 Quarter 2 Quarter 3 Quarter 4 Budgeted Unit Sales 34,000 54,000 27,000 54,000 Each T-shirt is expected to sell for $18 The purchasing manager buys the T-shirts for $7 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 28 percent of the next quarter's sales demand Selling and administrative expenses are budgeted at $68,000 per quarter plus 14 percent of total sales revenue. Required 1. Determine budgeted sales revenue for each quarter Quarter 1 Quarter 2 Quarter 3 Budgeted Sales Revenue 2. Determine budgeted cost of merchandise purchased for each quarter Quarter 1 Quarter 2 Quarter 3 Budgeted Cost of Merchandise Purchased 3. Determine budgeted cost of good sold for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Cost of Goods Sold 4. Determine selling and administrative expenses for each quarter Quarter 1 Quarter 2 Quarter 3 Budgeted Selling and Administrative nses 5. Complete the budgeted income statement for each quarter ED CANYON T-SHIRT COMPAN Budgeted Income Statement Quarter 1 Quarter 2 Quarter 3 Budgeted Gross Margin Budgeted Net Operating Income

Explanation / Answer

1) Budgeted Sales Revenue:-

2) Budgeted Cost of Merchandise Purchase:-

Calculation of Budgeted Units Purchased :-

Budgeted Units Purchased = Budgeted Units sold + 28% of next Qtr.'s Sales Demand.

Qtr. 1 :-

= 34000 + (28% * 54000)

= 49120

Qtr. 2 :-

= 54000 + (28% * 27000)

= 54000 + 7560

= 61560

Qtr. 3 ;-

= 27000 + (28% * 54000)

= 27000 + 15120

= 42120

3) Budgeted Cost of Goods Sold :-

4) Budgeted Selling and Administrative Expenses :-

= Budgeted Selling and Admin. Expenses + 14% of Total Sales Revenue

5) Budgeted Net Operating Income :-

Particulars Qtr.1 Qtr.2 Qtr.3 Budgeted Units Sale (A) 34000 54000 27000 Sell Price Per Unit (B) $18 $18 $18 Budgeted Sales Revenue (A*B) $612000 $972000 $486000

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