Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern

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 56,000 Quarter 3 28,000 Quarter 4 56,000 Budgeted Unit Sales 36,000 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. 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. 1 Quarter 2 Quarter 3 Budgeted Cost of Merchandise Purchased

Explanation / Answer

1 Quarter 1 Quarter 2 Quarter 3 Budgeted unit sales 36000 56000 28000 Unit selling price 11 11 11 Budgeted sales revenue 396000 616000 308000 2 Quarter 1 Quarter 2 Quarter 3 Budgeted unit sales 36000 56000 28000 Add: Ending inventory 11760 5880 11760 Total needs 47760 61880 39760 Less: Beginning inventory 7560 11760 5880 Budgeted purchases 40200 50120 33880 Cost per unit 4 4 4 Budgeted cost of merchandise purchased 160800 200480 135520

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