Pink House Ltd. sells plastic pink flamingos. The following operating expenses were provided for the month of April 2020:

Sales salaries			$25,000
Advertising			3% of monthly sales
Sales commissions			2.5% of monthly sales
Delivery expenses			$2,500
Rent expense			$10,500
Amortization			$580
Utilities			$800
Insurance			$1,200
Telephone			$600

The company budgets cost of goods sold to be 55% of total sales.
Expected sales for April and May are $850,000 and $925,000, respectively.
The company maintains a merchandise inventory of 20% of the following months cost of goods sold.
The company’s income tax rate is 30%.

Use the excel document found in the Assignments tab to answer the questions below.

1. Prepare a merchandise purchases budget for April 2020.  
2. Prepare a budgeted income statement for April 2020, showing details for cost of goods sold.  

Answer rating: 100% (QA)

To prepare the merchandise purchases budget for April 2020 and the budgeted income statement for April 2020 we need to calculate the following 1 Cost ... View the full answer