This bottom picture is the drop down of the terms used Pargo Company is preparin

Question

This bottom picture is the drop down of the terms used

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 1,700,000 units. Quarterly sales are 19% 27% 23% and 31%, respectively. The sales price is expected pe S42 per unit or the inst ree quar sand $44 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 25% of the next quarter's budgeted sales volume Direct materials. Each unit requires 2 pounds of raw materials at a cost of $10 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 502,000 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 Year Expected unit sales Unit selling price Total sales

Explanation / Answer

SALES BUDGET Q-1 Q-2 Q-3 Q-4 YEAR Budgeted Sales units 323,000 459,000 391,000 527,000 1,700,000 Selling price per unit 42 42 42 42 42 Total Sales 13,566,000 19,278,000 16,422,000 22,134,000 71,400,000 PRODUCTION BUDGET Q-1 Q-2 Q-3 Q-4 YEAR Q-1 2018 Budgeted Sales Units 323,000 459,000 391,000 527,000 1,700,000 371,450 Add: Desired Ending Finished inventory 114,750 97,750 131,750 92,863 92,863 Total Needs 437,750 556,750 522,750 619,863 1,792,863 Less: Beginning Finished Inventory 80,750 114,750 97,750 131,750 80,750 Required Production in units 357,000 442,000 425,000 488,113 1,712,113 RAW MATERIAL PURCHASE BUDGET Q-1 Q-2 Q-3 Q-4 YEAR Budgeted Production Units 357,000 442,000 425,000 488,113 1,712,113 RM Requirement per unit in pounds 2 2 2 2 2 Total Raw material required in pouds 714,000 884,000 850,000 976,226 3,424,226 Add: Desired Ending Inventory 88,400 85,000 97,623 50,200 50,200 Total needs 802,400 969,000 947,623 1,026,426 3,474,426 Less: Beginning Inventory 71,400 88,400 85,000 97,623 71,400 Budgeted Purchase in pounds 731,000 880,600 862,623 928,803 3,403,026 Cost per pound 10 10 10 10 10 Budgeted Purchase in $ 7,310,000 8,806,000 8,626,230 9,288,030 34,030,260

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