Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern
ID: 2558644 • Letter: R
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: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted Unit Sales 40,000 60,000 30,000 60,000 Each T-shirt is expected to sell for $15. The purchasing manager buys the T-shirts for $6 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 25 percent of the next quarter’s sales demand. Selling and administrative expenses are budgeted at $80,000 per quarter plus 10 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.
(I need help with #2, #3, and #5. All the ones with blank answers are the ones that I got wrong.)
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 40,000 60,00030,00060,000 . Each T-shirt Is expected to sell for $15. The purchasing manager buys the T-shirts for $6 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 25 percent of the next quarter's sales demand. . Selling and administrative expenses are budgeted at $80,000 per quarter plus 10 percent of total sales revenue. Required: 1. Determine budgeted sales revenue for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Sales Revenue600,000900,000$450,00 2. Determine budgeted cost of merchandise purchased for each quarter Quarter 1 Quarter 3 Budgeted Cost of Merchandise PurchasedExplanation / Answer
Solution:
Part 2 ---
Budgeted Cost of Merchandise Purchased
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Budgeted Unit Sales
40000
60000
30000
60000
Add: Ending Inventory (25% of next quarter sales)
15000
7500
15000
Total Needs
55000
67500
45000
Less: Beginning Inventory (Ending inventory of last quarter)
10000
15000
7500
Total Budgeted Merchandise Purchases in Units
45000
52500
37500
Unit Cost
$6
$6
$6
Budgeted Cost of Merchandise Purchases
$270,000
$315,000
$225,000
Part 3 – Budgeted Cost of Goods Sold
Budgeted Cost of Goods Sold
Quarter 1
Quarter 2
Quarter 3
Budgeted Unit Sales
40000
60000
30000
Unit Cost (T Shirt)
$6
$6
$6
Budgeted Cost of Goods Sold
$240,000
$360,000
$180,000
Part 5 --- Budgeted Income Statement
Budgeted Income Statement
Quarter 1
Quarter 2
Quarter 3
Budgeted Sales Revenue
$600,000
$900,000
$450,000
Budgeted Cost of Goods Sold
$240,000
$360,000
$180,000
Budgeted Gross Profit (Sales - COGS)
$360,000
$540,000
$270,000
Budgeted Selling and administrative expenses
$140,000
$170,000
$125,000
Budgeted Net Operating Income
$220,000
$370,000
$145,000
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Budgeted Cost of Merchandise Purchased
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Budgeted Unit Sales
40000
60000
30000
60000
Add: Ending Inventory (25% of next quarter sales)
15000
7500
15000
Total Needs
55000
67500
45000
Less: Beginning Inventory (Ending inventory of last quarter)
10000
15000
7500
Total Budgeted Merchandise Purchases in Units
45000
52500
37500
Unit Cost
$6
$6
$6
Budgeted Cost of Merchandise Purchases
$270,000
$315,000
$225,000
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