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:
1. Expected monthly sales for April, May, June, and July are$220,000, $190,000, $310,000, and $90,000, respectively.
2. Cost of goods sold is 30 percent of expected sales.
3. CGC’s desired ending inventory is 20 percent of the followingmonth’s cost of goods sold.
4. Monthly operating expenses are estimated to be:
Salaries: $30,000.
Delivery expense: 4 percent of monthly sales.
Rent expense on the warehouse: $4,500.
Utilities: $800.
Insurance: $175.
Other expenses: $260.
Required:
1. Compute the budgeted cost of purchases for each month in thesecond quarter.
2. Complete the budgeted income statement for each month in thesecond quarter.
