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Integrated purchases and cash payments budget Senegalese Specialties, a retailer of West African food products, has completed the sales forecast for the coming year:

January	$37,000	July	$38,000
February	$38,000	August	$37,000
March	$32,000	September	$33,000
April	$40,000	October	$40,000
May	$36,000	November	$48,000
June	$31,000	December	$52,000

Senegalese Specialties maintains an ending inventory level of 60 percent of the following months cost of goods sold. The companys cost of goods sold is 35 percent of sales.

Required: a. Prepare Senegalese Specialties purchases budget for June and July. Use the following format:

	Budgeted sales dollars
X	Cost of goods sold percentage
=	Cost of goods sold
+	Ending inventory
=	Total inventory required
-	Beginning inventory
=	Budgeted purchases

b. Assuming that Senegalese Specialties pays for 50 percent of its purchases in the month of purchase and the remaining 50 percent in the month following the purchase, prepare the companys cash payments budget for July.

2.

J Bryson, Ltd. is a local coat retailer. The stores accountant prepared the following income statement for the month ended January 31.

Sales revenue		$750,000
Cost of goods sold		300,000
Gross margin		450,000
Less operating expenses
Selling expense	$23,560
Administrative expense	49,500	73,060
Net operating income		$376,940

Bryson sells its coats for $250 each. Selling expenses consist of fixed costs plus a commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal to 6% of sales.

Required:

Prepare a contribution format income statement for January.

Using the format y = mx + b, develop a cost formula for the operating expenses.

If 2,700 coats are sold next month, what is the expected total contribution margin?

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