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 3 percent for peaches and 8 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 15 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 $610,000, prepare the company’s budgeted annual income statement.

Ms.Jasper estimates next year’s ending inventory will be $35,500 for peaches and $56,400 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 410,000 460,000 580,000 390,000 1,840,000 Total $ 639,000 $ 709,000 $ 889,000 $ 639,000 $ 2,876,000

Explanation / Answer

1. Sales Budget for next yeat quarterwise

Estimation bases on sales will increase 3 percent for peaches and 8 percent for orange

2. Budgeted Purchase for next year

Company’s budgeted annual income statement for next year

3. Inventory purchases budgets quarterwise

First Quarter Second Quarter Third Quarter Fourth Quarter Total Peaches $ 2,35,870 $ 2,56,470 $ 3,18,270 $ 2,56,470 $ 10,67,080 Oranges 4,42,800 0 4,96,800 0 6,26,400 0 4,21,200 19,87,200 Total $ 6,78,670 $ 7,53,270 $ 9,44,670 $ 6,77,670 $ 30,54,280

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