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 1,000,000 units. Quarterly sales are 21%, 25%, 27%, and 27%, respectively. The sales price is expected to be $38 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 10% 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 quarterâs budgeted sales volume. Direct materials. Each 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 quarterâs production requirements. Assume the production requirements for first quarter of 2018 are 499,000 pounds. Prepare the sales, production, and direct materials budgets by quarters for 2017.
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 1,000,000 units. Quarterly sales are 21%, 25%, 27%, and 27%, respectively. The sales price is expected to be $38 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 10% 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 quarterâs budgeted sales volume. Direct materials. Each 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 quarterâs production requirements. Assume the production requirements for first quarter of 2018 are 499,000 pounds. Prepare the sales, production, and direct materials budgets by quarters for 2017.
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On January 1, 2014, the Hardin Company budget committee hasreached agreement on the following data for the 6 months endingJune 30, 2014.
| Sales units: | First quarter 5,000; second quarter 6,000; third quarter7,000 | |
| Ending raw materials inventory: | 40% of the next quarterâs production requirements | |
| Ending finished goods inventory: | 25% of the next quarterâs expected sales units | |
| Third-quarter production: | 7,200 units |
The ending raw materials and finished goods inventories at December31, 2013, follow the same percentage relationships to productionand sales that occur in 2014. 3 pounds of raw materials arerequired to make each unit of finished goods. Raw materialspurchased are expected to cost $4 per pound.
1quarter 2quarter
Expected Unit Sales: ___________________________________________
Add Desired Ending Finished GoodsUnit:____________________ _______________________
Total Required Units: ___________________________________________
Less Begining Finished Goods Unit: ___________________________________________
Required Production Units: ___________________________________________
Prepare a direct materials budget by quarters for the 6-monthperiod ended June 30, 2014.
Units to be Produced: ___________________________________________
Direct Materials per unit: ___________________________________________
Total Pounds Needed for Production: ___________________________________________
Add: Desired Ending Direct Materials____________________ _______________________
Total Materials Required: ___________________________________________
Less Beginning Direct Materials: ___________________________________________
Direct Materials Purchases: ___________________________________________
Cost Per Pound: ___________________________________________
Total Cost of Direct Materials Purchases:____________________ _______________________
