In: Accounting
PA8-6 Preparing Operating Budgets for a Merchandising Firm (LO 8-5, 8-3a, 6 g, h)
Red Canyon T-shirt Company operates a chain of T-shirt shop 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 | 33,000 | 53.000 | 26,500 | 53,000 |
• Each T-shirt is expected to sell for $19.
• The purchasing manager buys the T-shirts for 58 each
• The company needs to have enough T-shirts on hand at the end of each quarter to fill 29 percent of the next quarter's sales demand.
• Seling and administrative expenses are budgeted at $66,000 per quarter plus 15 percent of total sales revenue.
5. Complete the budgeted income statement for each quarter.