Diana Corp wholesales peaches and oranges.Diana is working with the company’s accountant to a budget. She estimates that sales will increase 6 percent for peaches and 11 percent for oranges. The current year’s sales revenue data follow:

 First QuarterSecond QuarterThird QuarterFourth QuarterTotalPeaches$229,000 $249,000 $309,000 $249,000 $1,036,000 Oranges 405,000  455,000  575,000  385,000  1,820,000 Total$634,000 $704,000 $884,000 $634,000 $2,856,000 

Based on the company’s past experience, cost of goods sold is usually 65 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 the cost of goods sold for the first quarter to determine the beginning inventory for the first quarter.)


  1. Prepare the company’s sales budget for the next year for each quarter by individual product.
  2. If the selling and administrative expenses are estimated to be $630,000, prepare the company’s budgeted annual income statement.
  3. Ms.Jasper estimates next year’s ending inventory will be $34,200 for peaches and $57,700 for oranges. Prepare the company’s inventory purchases budgets for the next year, showing quarterly figures by product.
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