Jasper Fruits Corporation wholesales peaches and oranges. Barbara Jasper is work

Question

Jasper Fruits Corporation wholesales peaches and oranges. Barbara Jasper is working with the company’s accountant to prepare next year’s budget. Ms. Jasper estimates that sales will increase 6 percent for peaches and 11 percent for oranges. The current year’s sales revenue data follow:

Based on the company’s past experience, cost of goods sold is usually 65 percent of sales revenue. Company policy is to keep 10 percent of the next period’s estimated cost of goods sold as the current period’s ending inventory. (Hint: Use the cost of goods sold for the first quarter to determine the beginning inventory for the first quarter.)

Required

Prepare the company’s sales budget for the next year for each quarter by individual product.

If the selling and administrative expenses are estimated to be $630,000, prepare the company’s budgeted annual income statement.

Ms.Jasper estimates next year’s ending inventory will be $34,200 for peaches and $57,700 for oranges. Prepare the company’s inventory purchases budgets for the next year, showing quarterly figures by product.

First Quarter Second Quarter Third Quarter Fourth Quarter Total Peaches $ 229,000 $ 249,000 $ 309,000 $ 249,000 $ 1,036,000 Oranges 405,000 455,000 575,000 385,000 1,820,000 Total $ 634,000 $ 704,000 $ 884,000 $ 634,000 $ 2,856,000

Explanation / Answer

A) Sales Budget

Sales budget by increasing 6% for Peaches and 11% for Orange of each quaarter from last year. On the assumpstion that the same trend will follow.

eg: peach 1st quarter (229,000*1.06)=242,740

peach 2nd quarter (249,000*1.06)=263940

,,,,,,,,,,,,,,,,,,,,,,,,,,,

orange quarter 1 (405,000*1.11)=449,550

B) Budgeted Annual Income Statement

C)

First Quarters Beigning inventory=Cost of sales of 1st quarter*10%

Peache's=(242,740*65%)*10%

=242,740*0.65*0.1 =15778

   Orange=(449,550*.65)*0.1 = 29220

This amount of opening stock will be there.

Inventory Purchase Budget-Peaches

Inventory Purchase Budget-Orange

First Quarter 2nd Quarter 3rd Quarter 4th Quarter Total(individual fruit) Peaches 242,740 263,940 327,540 263,940 1,098,160 Orange 449,550 505,050 638,250 427,350 2,020,200 Total 3,118,360

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