PA33-6 Preparing Operating Budgets for a Merchandising Firm 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: LO33-5 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 0-6689 revenue. Required: Prepare the following operating budgets for quarters 1, 2, and 3. (You do not have enough information to complete quarter 4.) 1. Sales budget. 2. Merchandise purchases budget. 3. Cost of goods sold budget. 4. Selling and administrative expense budget. 5. Budgeted income statement.
PA33-6 Preparing Operating Budgets for a Merchandising Firm 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: LO33-5 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 0-6689 revenue. Required: Prepare the following operating budgets for quarters 1, 2, and 3. (You do not have enough information to complete quarter 4.) 1. Sales budget. 2. Merchandise purchases budget. 3. Cost of goods sold budget. 4. Selling and administrative expense budget. 5. Budgeted income statement.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter9: Profit Planning And Flexible Budgets
Section: Chapter Questions
Problem 50E: Use the following information for Exercises 9-50 and 9-51: Assume that Stillwater Designs produces...
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