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 57,000 Quarter 3 28,500 Quarter 4 57,000 Budgeted Unit Sales 37,000 Each T-shirt is expected to sell for $12 . The purchasing manager buys the T-shirts for $5 each. . The company needs to have enough T-shirts on hand at the end of each quarter to fill 22 percent of the next quarter's sales demand. . Selling and administrative expenses are budgeted at $74,000 per quarter plus 20 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

Explanation / Answer

1 Quarter 1 Quarter 2 Quarter 3 Budgeted Sales Revenue(Sales Unit * 12)             444,000             684,000             342,000 2 Quarter 1 Quarter 2 Quarter 3 Budgeted Cost of Merchendise Purchased(Purchase *5)             207,000             253,650             173,850 Merchendise Purchase Budget Particulars Quarter 1 Quarter 2 Quarter 3 Merchendise Purchase Budget Enidng Inventory (22% * Slaes Next Quarter)                12,540                  6,270 12540 Add : Sales                37,000                57,000 28500 Less : Begning Inventory                  8,140                12,540                  6,270 Total Purchases                41,400                50,730                34,770 3 Quarter 1 Quarter 2 Quarter 3 Budgeted Cost of Goods Sold (Unit Sold * 5 )             185,000             285,000             142,500 4 Quarter 1 Quarter 2 Quarter 3 Budgeted Selling and Administrative expenses Fixed                74,000                74,000                74,000 20% of Sales Revenue                88,800             136,800                68,400 Total             162,800             210,800             142,400 5 Budgeted Income Statement Particulars Quarter 1 Quarter 2 Quarter 3 Sales             444,000             684,000             342,000 Cost of Goods sold             185,000             285,000             142,500 Gross Margin             259,000             399,000             199,500 Selling and Administrative expenses             162,800             210,800             142,400 Net Operating Income                96,200             188,200                57,100

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