Question

Question 2 View Policies Current Attempt in Progress Par company is preparing its master budget for 2020 Relevant data pertannoits sales, production and direct materials budgets are as follows Swes, Sales for the year are expected to total 2,000,000 units Quarterly sales are 21%, 278,23 and 29% respectively. The sales price is expected to be $38 per unit for these three quarters and per unit beginning in the fourth quarter Sales in the first Carter of 2021 are expected to be 15% higher than the budgeted sales for the first quarter of 2020. P o n Management des res to maintain the ending finished goods inventories at 20% of the next quarter' s geted sales volume Direct materiallach unit requires 2 pounds of raw materials at a cost of $11 per pound Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for first cuarter of 2021 are 510.000 pounds Prepare the sales production and direct materias budgets by quarters for 2020. PARGO COMPANY Sales Budget Quarter - Year

Answer 1

Answer is given below with full working

Pargo Company a. Sales Budget Sales units Selling price Sales value | Quarter Quarter II Quarter III Quarter IV Full year 420,000 540,000 460,000 580,000 2,000,000 $38.00 $38.00 $38.00 $47.00 $15,960,000 $20,520,000 $17,480,000 $27,260,000 $81,220,000 b. Production Budget - Units Budgeted Unit sales Add: Desired Closing inventory Quarter 420,000 108,000 528,000 84,000 444,000 Quarter II 540,000 92,000 632,000 108,000 524,000 Quarter III 460,000 116,000 576,000 92,000 484,000 Quarter IV 580,000 96,600 676,600 116,000 560,600 Full year 2,000,000 96,600 2,096,600 84,000 2,012,600 Less Opening Stock Total Production in units For Quarter 1 Opening stock will be 20% of Q1 Saes Q1 Volume of 2021 is 483,000 units- Q4 closing inventory will be 20% of this 96,600 units c. Direct Material Purchase Budget Quarter 444,000 Quarter II 524,000 Quarter III 484,000 Quarter IV 560,600 Full year 2,012,600 Total Production Units Units needed per production output Raw material needed for production Add: Desired Closing inventory Less Opening Stock Total Purchase Budget Purchase Cost per unit Purchase value budget 888,000 104,800 992,800 88,800 904,000 $111 9,944,000 1,048,000 96,800 1,144,800 104,800 1,040,000 $11 11,440,000 968,000 112,120 1,080,120 96,800 983,320 $11 10,816,520 1,121,200 510,000 1,631,200 112,120 1,519,080 $11 16,709,880 4,025,200 510,000 4,535,200 88,800 4,446,400 11 48,910,400 For Quarter 1 Opening stock will be 10% of Q1 Units needed for production