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PA8-6 Preparing Operating Budgets for a Merchandising Firm (LO 8-5, 8-3a, 6 g, h) Red Canyon T-shirt Company opera...

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 1Quarter 2Quarter 3Quarter 4
  Budgeted Unit Sales33,00053.00026,50053,000

    

• 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. 

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