Citrus Girl Company (CGC) purchases quality citrus produce from local growers and sells the produce via the
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Question:
Citrus Girl Company (CGC) purchases quality citrus produce from local growers and sells the produce via the Internet across the United States. To keep costs down, CGC maintains a warehouse but no showroom or retail sales outlets. CGC has the following information for the second quarter of the year:
- Expected monthly sales for April, May, June, and July are $150,000, $120,000, $240,000, and $60,000, respectively.
- Cost of goods sold is 30 percent of expected sales.
- CGC's desired ending inventory is 50 percent of the following month's cost of goods sold.
- Monthly operating expenses are estimated to be:
- Salaries: $36,000.
- Delivery expense: 6 percent of monthly sales.
- Rent expense on the warehouse: $3,000.
- Utilities: $600.
- Insurance: $300.
- Other expenses: $400.
Required:
- Compute the budgeted cost of purchases for each month in the second quarter.
- Complete the budgeted income statement for each month in the second quarter.
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