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 47,000 74,000 37,000 74,000 Each T-shirt is expected to sell for $22. The purchasing manager buys the T-shirts for $9 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 32 percent of the next quarter’s sales demand. Selling and administrative expenses are budgeted at $94,000 per quarter plus 10 percent of total sales revenue. Required: 1.Determine budgeted sales revenue for quarters 1, 2, and 3. 2. Determine budgeted cost of merchandise purchased for quarters 1, 2, and 3. 3. Determine budgeted cost of good sold for quarters 1, 2, and 3. 4. Determine selling and administrative expenses for quarters 1, 2, and 3. 5. Complete the budgeted income statement for quarters 1, 2, and 3. Req 1 : Determine budgeted sales revenue for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Sales Revenue Req 2 Determine budgeted cost of merchandise purchased for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Cost of Merchandise Purchased

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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	47,000	74,000	37,000	74,000

Each T-shirt is expected to sell for $22.
The purchasing manager buys the T-shirts for $9 each.
The company needs to have enough T-shirts on hand at the end of each quarter to fill 32 percent of the next quarter’s sales demand.
Selling and administrative expenses are budgeted at $94,000 per quarter plus 10 percent of total sales revenue.

Required:
1.Determine budgeted sales revenue for quarters 1, 2, and 3.
2. Determine budgeted cost of merchandise purchased for quarters 1, 2, and 3.
3. Determine budgeted cost of good sold for quarters 1, 2, and 3.
4. Determine selling and administrative expenses for quarters 1, 2, and 3.
5. Complete the budgeted income statement for quarters 1, 2, and 3.

Req 1 :

Determine budgeted sales revenue for each quarter.

	Quarter 1	Quarter 2	Quarter 3
Budgeted Sales Revenue

Req 2

Determine budgeted cost of merchandise purchased for each quarter.

	Quarter 1	Quarter 2	Quarter 3
Budgeted Cost of Merchandise Purchased

Req 3

Determine budgeted cost of good sold for each quarter.

	Quarter 1	Quarter 2	Quarter 3
Budgeted Cost of Goods Sold

Req 4

Determine selling and administrative expenses for each quarter.

	Quarter 1	Quarter 2	Quarter 3
Budgeted Selling and Administrative Expenses

Req 5

Complete the budgeted income statement for each quarter.

RED CANYON T-SHIRT COMPANY
Budgeted Income Statement
	Quarter 1	Quarter 2	Quarter 3




Budgeted Gross Margin



Budgeted Net Operating Income

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