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:

Each T-shirt is expected to sell for $15.

The purchasing manager buys the T-shirts for $6 each.

The company needs to have enough T-shirts on hand at the end of each quarter to fill 25 percent of the next quarter’s sales demand.

Selling and administrative expenses are budgeted at $80,000 per quarter plus 10 percent of total sales revenue.

Required:

1. Determine budgeted sales revenue for each quarter.

2. Determine budgeted cost of merchandise purchased for each quarter.

3. Determine budgeted cost of good sold for each quarter.

4. Determine selling and administrative expenses for each quarter.

5. Complete the budgeted income statement for each quarter.

****NEED HELP WITH THE BUDGETED INCOME STATEMENT**

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted Unit Sales 40,000 60,000 30,000 60,000

Explanation / Answer

Budgeted incoem statement :

Quarter 1 Quarter 2 Quarter 3 Budgeted sales revenue 600000 900000 450000 Budgeted cost of goods sold 240000 360000 180000 Budgeted gross margin 360000 540000 270000 Budgeted selling and administrative expenses 140000 170000 125000 Budgeted net operating income 220000 370000 145000

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