Citrus Girl Company (CGC) purchases quality citrus produce fromlocal growers and sells the produce via the Internet across theUnited States. To keep costs down, CGC maintains a warehouse, butno showroom or retail sales outlets. CGC has the followinginformation for the second quarter of the year:
- Expected monthly sales for April, May, June, and July are$280,000, $250,000, $370,000, and $150,000, respectively.
- Cost of goods sold is 30 percent of expected sales.
- CGC’s desired ending inventory is 25 percent of the followingmonth’s cost of goods sold.
- Monthly operating expenses are estimated to be:
- Salaries: $36,000
- Delivery expense: 5 percent of monthly sales
- Rent expense on the warehouse: $7,500
- Utilities: $1,500
- Insurance: $150
- Other expenses: $250
Required:
1. Compute the budgeted cost of purchases foreach month in the second quarter.
2. Complete the budgeted income statement foreach month in the second quarter.
