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 $21.

The purchasing manager buys the T-shirts for $8 each.

The company needs to have enough T-shirts on hand at the end of each quarter to fill 31 percent of the next quarter’s sales demand.

Selling and administrative expenses are budgeted at $62,000 per quarter plus 18 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.

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Q1 Q2 Q3 Q4 Budgeted Unit Sales                31,000.00               51,000.00            25,500.00            51,000.00 Selling price per T shirt                        21.00                        21.00                    21.00                    21.00 1) Expected sales = Unit sales *Sp per unit             651,000.00         1,071,000.00         535,500.00      1,071,000.00 Budgeted Unit Sales                31,000.00               51,000.00            25,500.00            51,000.00 ending inventory = 31%*Next Q sales                15,810.00                  7,905.00            15,810.00 Beginning inventory                  9,610.00               15,810.00              7,905.00 2) Budgeted Purchases = sales + Ending - Beginning                37,200.00               43,095.00            33,405.00 Price per unit                          8.00                          8.00                      8.00 Budgeted Cost of Merchandise Purchased             297,600.00             344,760.00         267,240.00 3) Budgeted Unit Sales                31,000.00               51,000.00            25,500.00            51,000.00 Budgeted purchase price                          8.00                          8.00                      8.00                      8.00 Budgeted Cost of Goods Sold             248,000.00             408,000.00         204,000.00         408,000.00 4) fixed selling and admin expenses                62,000.00               62,000.00            62,000.00            62,000.00 Variable Selling and admin exp = .18*sales               117,180.00             192,780.00            96,390.00         192,780.00 total selling and admin expenses             179,180.00             254,780.00         158,390.00         254,780.00 5) Expected sales = Unit sales *Sp per unit             651,000.00         1,071,000.00         535,500.00      1,071,000.00 Budgeted Cost of Goods Sold             248,000.00             408,000.00         204,000.00         408,000.00 Budgeted Gross Margin             403,000.00             663,000.00         331,500.00         663,000.00 total selling and admin expenses             179,180.00             254,780.00         158,390.00         254,780.00 Budgeted Net Operating Income             223,820.00             408,220.00         173,110.00         408,220.00

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