PA$8-6($Algo$)$ Preparing Operating Budgets for a Merchandising Firm $[$LO $8-5]$

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:

Each T$-$shirt is expected to sell for $$14.$

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 $24$ percent of the next quarter's sales

demand.

Selling and administrative expenses are budgeted at $$78,000$ per quarter plus $16$ percent of total sales revenue.

Required:

Determine budgeted sales revenue for each quarter.

Determine budgeted cost of merchandise purchased for each quarter.

Determine budgeted cost of good sold for each quarter.

Determine selling and administrative expense for each quarter.

Complete the budgeted income statement for each quarter.

Answer is complete but not entirely correct.

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Determine budgeted cost of merchandise purchased for each quarter.