Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production,...

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Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct material

PARGO COMPANY Direct Materials Budget Quarter 1 2 Year 0 | | | 0

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Answer 1

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Sales Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Sales units	180000	230000	230000	360000	1000000
Sales price per unit	$ 38.00	$ 38.00	$ 38.00	$ 43.00
Sales amount	$ 68,40,000	$ 87,40,000	$87,40,000	$ 1,54,80,000	$ 3,98,00,000

Production Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Sales units	180000	230000	230000	360000	1000000
Add : Closing Stock Required	46000	46000	72000	39600
Total Goods Required	226000	276000	302000	399600	1203600
Less : Opening Stock	36000	46000	46000	72000
Production Required	190000	230000	256000	327600	1003600

Desired Ending Inventory = 20% of next quarter sales
Sales for 1st quarter 2021 = 180000 x 1.1 = 198000 units
Beginning Inventory = 20% of current quarter sales

Direct Material Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
Production Required	190000	230000	256000	327600
Raw Material Per unit	2	2	2	2
Raw Material for Production	380000	460000	512000	655200
Add : Closing Stock Required	46000	51200	65520	49000
Total Needs	426000	511200	577520	704200
Less : Opening Stock	38000	46000	51200	65520
Material to be purchased	388000	465200	526320	638680
Rate per pound	$ 10.00	$ 10.00	$ 10.00	$ 10.00
Amount of Rubber	$ 38,80,000	$ 46,52,000	$52,63,200	$ 63,86,800	$ 2,01,82,000

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