Do It! Review 9-2 Your answer is partially correct. Try again. 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 1,100,000 units. Quarterly sales are 19%, 25%, 24%, and 32%, 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 15% higher than the budgeted sales for the first quarter of 2017. Production Management desires to maintain the ending finished goods inventories at 20% 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 490,000 pounds. Prepare the sales, production, and direct materials budgets by quarters for 2017. PARGO COMPANY Sales Budget (For the Year Ending December 31, 2017 ) Quarter 1 2 3 4 Year 1,100,000 Expected unit sales Unit selling price C 209000 275000 264000I 352000 40 40 40 45 Todas 2009 | 110), 105.00)15300), 1500 PARGO COMPANY Production Budget (For the Year Ending December 31, 2017 ) Quarter 1 2 - 209000 275000 Year Expected Unit Sales 264000 352000 (Add :). Desired Ending Finished Goods Inventory :) 55000 52800 70400 45980 | Total Required Units 264000 327800 397980 334400 52800 Less :) (Beginning Finished Goods Inventory 41800 L 55000 L 70400 Required Production Units 222200 272800 T 281600 327580 1104180 PARGO COMPANY Direct Materials Budget (For the Year Ending December 31, 2017 Quarter 2 Year (Units to be produced 2222001 272800 281600 327580 Direct Materials Per Unit (Total Pounds Required for Production - 444400 L 545600 L 563200 L 655160 Add . Desired Ending Direct Materials 54560 L 56320 65516 22990 Total Materials Required ) 498960 601920 628716 678150 Less ). (Beginning Direct Materials 44440 54560 56320 65516 Cirect Materials Purchases 454520 547360 572396 612634 L L 12 (Cost Per Pound [Total Cost of Direct Materials Purchases) 1 2 5454240 12 6568320 SL 12 6868752 12 7351608 L 26242920