Budget Exercise

Pargo Company is preparing its master budget for $2017.$

Relevant data

pertaining to its sales, production, and direct materials budgets

are as follows.

Sales. Sales for the year are expected to total $1,000,000$ units.

Quarterly sales are $20\%,25\%,25\%,$ and $30\%,$ respectively.

The sales price is expected to be $$40$ per unit for the first three

quarters and $$45$ per unit beginning in the fourth quarter.

Sales in the first quarter of $2018$ are expected to be $20\%$

higher than the budgeted sales for the first quarter of $2017.$

Production. Management desires to maintain the ending

finished goods inventories at $25\%$

of the next quarter's budgeted sales volume.

Direct materials. Each unit requires $2$ pounds of raw materials

at a cost of $$12$ per pound.

Management desires to maintain raw materials inventories at

$10\%$ of the next quarter's

production requirements. Assume the production requirements

for first quarter of $2018$

are $450,000$ pounds.

Required Prepare the sales, production, and direct materials

budgets by quarters for $2017.$

Furthermore

Pargo Company is preparing its budgeted income statement

for $2017.$ Relevant data pertaining to its sales, production, and

direct materials budgets can be found in

In addition, Pargo budgets $0\mathrm{.}3$ hours of direct labor per unit,

labor costs at $$15$ per hour, and manufacturing overhead at

$$20$ per direct labor hour. Its budgeted selling and

administrative expenses for $2017$ are $$6,000,000.$

$($a$)$ Calculate the budgeted total unit cost.

$($b$)$ Prepare the budgeted multiple$-$step income statement for

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