Question
NEED HELP I START TO DO IT BUT IDK IF I DID IT RIGHT!! Pargo Company is preparing its master budget for 2017. Relevant data
NEED HELP I START TO DO IT BUT IDK IF I DID IT RIGHT!!
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 1,500,000 units. Quarterly sales are 20%, 27%, 26%, and 27%, respectively. The sales price is expected to be $41 per unit for the first three quarters and $43 per unit beginning in the fourth quarter. Sales in the first quarter of 2018 are expected to be 10% 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 quarters 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 quarters production requirements. Assume the production requirements for first quarter of 2018 are 505,000 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 Expected unit sales 300000 405000 390000 405000 1500000 41 41 43 Unit selling price Total sales 12300000 16605000 15990000 17415000 62310000 PARGO COMPANY Production Budget For the Year Ending December 31, 2017 Quarter 2 3 4 Year 30000 Expected Unit Sales Add. Desired Ending Finished Goods Inventory Total Required Units LessBeginning Finished Goods Inventory 405000 390000 405000 101250 97500 101250 82500 40125 502500 49125 487500 7500 101250 97500 101250 Required Production Units 32625 40125 393750 386250 1507500Step by Step Solution
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