Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials b
udgets are as follows. Sales. Sales for the year are expected to total 1,100,000 units. Quarterly sales are 19%, 25%, 24%, and 32%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 15% higher than the budgeted sales for the first quarter of 2020. Production. Management desires to maintain the ending finished goods inventories at 20% of the next quarter’s 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 quarter’s production requirements. Assume the production requirements for first quarter of 2021 are 490,000 pounds. Prepare the sales, production, and direct materials budgets by quarters for 2020.
1 answer:
You might be interested in
