Q1) Terry's Equipment Center has been organized to sell line of lawn and garden equipments. Company start operations on January 1 with the following assets.
Cash - $14,000
Inventory - 29,000
Land - 31,000
Buildings and equipments - $250,000
(Useful life 20 years, no residual value, of which $210,000 relates to selling and $40,000 to general and administrative activities)
Sales for January, February, and March (that is, first quarter) are expected to $140,000; they are expected to be $280,000 for next three months, and $325,000 three months after that. Certain expenses are expected to differ with sales as follows:
||Percent of Sales Dollars
|Cost of goods sold
|Variable selling expenses
|Variable administrative expenses
Other expenses not expected to differ with sales:
||$25,000 per quarter
||18,550 per quarter
||3,125 per quarter
Make operating budget for first and second quarters of operations of Terry's Equipment Center.