Managerial Accounting: P7-21A Hammond Fruits Corporation wholesales peaches and oranges

Fundamentals of Managerial Accounting Concepts

Problem 7-21A Preparing budgets with multiple products
Hammond Fruits Corporation wholesales peaches and oranges. Lashanda King is working with the company's accountant to prepare next year's budget. Ms. King estimates that sales will increase 5 percent for peaches and 10 percent for oranges. The current year's sales revenue data follow.( look on the excel spread sheet)
First Quarter Second Quarter Third Quarter Fourth Quarter Total
Peaches 220,000 240,000 300,000 240,000 1,000,000
Oranges 400,000 450,000 570,000 380,000 1,800,000
Total 620,000 690,000 870,000 620,000 2,800,000
Based on company's past experience, cost of goods sold is usually 60 percent of sales revenue. Company policy is to keep 10 percent of the next period's estimated cost of goods sold as the current period's ending inventory. (hint: Use cost of goods sold for the first quarter to determine the beginning inventory for the first quarter.)

Required
a. Prepare the company 's sales budget for the next for each quarter by individual product.
b. If the selling and administrative expenses are estimated to be $700,000, prepare the company's budgeted annual income statement.
c. Ms. King estimates next year's ending inventory will be $34,000 for peaches and $56,000 for oranges. Prepare the company's inventory purchases budgets for the next year showing quarterly figures by product.
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