Paragraph Styles Editing Citrus Girl Company (CGC) purchases quality citrus prod
ID: 2509022 • Letter: P
Question
Paragraph Styles Editing Citrus Girl Company (CGC) purchases quality citrus produce from local growers and sells the produce via the Internet across the United States. To keep costs down, CGC maintains a warehouse, but no showroom or retail sales outlets. CGC has the following information for the second quarter of the year: Expected monthly sales for April, May, June, and July are $210,000, $180,000, $300,000, and $80,000, respectively. Cost of goods sold is 40 percent of expected sales. CGC's desired ending inventory is 50 percent of the following month's cost of goods sold. Monthly operating expenses are estimated to be: 1. 2. 3. 4. Salaries: $30,000 Delivery expense: 5 percent of monthly sales Rent expense on the warehouse: $4,000 . Utilities: $800 Insurance: $300 . Other expenses: $400 (Ctri) 219) 4/2/201 11:45 PMExplanation / Answer
Answer 1 Budgeted Cost of purchases for the each month in the second quarter April May June Sales $210,000.00 $180,000.00 $300,000.00 Cost of goods sold (40% of sales) $84,000.00 $72,000.00 $120,000.00 Add : Desired ending Inventory $36,000.00 $60,000.00 $16,000.00 Less : Beginning Inventory $42,000.00 $36,000.00 $60,000.00 Total Cost of Budgeted Purchases $78,000.00 $96,000.00 $76,000.00 Answer 2 Budgeted Income Statement for each month in the second quarter April May June Sales $210,000.00 $180,000.00 $300,000.00 less : Cost of goods sold $84,000.00 $72,000.00 $120,000.00 Budgeted Gross Margin $126,000.00 $108,000.00 $180,000.00 Less : Operating Expenses Salaries $30,000.00 $30,000.00 $30,000.00 Delivery Expense $10,500.00 $9,000.00 $15,000.00 Rent Expense $4,000.00 $4,000.00 $4,000.00 Utilities $800.00 $800.00 $800.00 Insurance $300.00 $300.00 $300.00 Other Expense $400.00 $400.00 $400.00 Total Operating Expenses $46,000.00 $44,500.00 $50,500.00 Budgeted Net Operating Income $80,000.00 $63,500.00 $129,500.00
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