Citrus Girl Company (CGC) purchases quality citrus produce from local growers an
ID: 2539214 • Letter: C
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 Cost of goods sold is 40 percent of expected sales 4. Monthly operating expenses are estimated to be: 1. Expected monthly sales for April, May, June, and July are $290,000, $260.000, $380,000, and $160,000, respectively. 3. CGC's desired ending inventory is 30 percent of the following month's cost of goods sold. Salaries: $37,000 Utilities: $1,600 Other expenses: $280 Delivery expense: 6 percent of monthly sales . Rent expense on the warehouse: $8,000 . Insurance: $180 Required 1. Compute the budgeted cost of purchases for each month in the second quarter. April May June Total cost of budgeted purchasers 2. Complete the budgeted income statement for each month in the second quarter. CITRUS GIRL COMPANY Budgeted Income Statement For the Month Ending April 30 May 31 June 30 4.Explanation / Answer
Required schedules is as prepared below:
Citrus Girl Company Purchase Budget For the Month Ending Particulars April May June July Cost of Goods Sold (a) 116,000 104,000 152,000 64,000 Planned ending inventory (b) ( 30% of next month COGS) 31,200 45,600 19,200 Beginning inventory (c ) 34,800 31,200 45,600 Budgeted purchases 112,400 118,400 125,600 Citrus Girl Company Budgeted Income Statement For the Month Ending Particulars April May June Sales $290,000 $260,000 $380,000 Less: Cost of goods sold $116,000 $104,000 $152,000 Budgeted Gross margin $174,000 $156,000 $228,000 Operating Expenses: Salaries 37,000 37,000 37,000 Delivery Expense (6% of Sales) 17400 15600 22800 Rent Expense 8,000 8,000 8,000 Utilities Expense 1,600 1,600 1,600 Insurance 180 180 180 Other Expense 280 280 280 Total expenses 64,460 62,660 69,860 Net operating Income 109,540 93,340 158,140