Pargo Company is preparing its budgeted income statement for 2020. 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 22%, 23%, 27%, and 28%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $46 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 13% higher than the budgeted sales for the first quarter of 2020. Production Management desires to maintain the ending finished goods inventories at 19% of the next quarter's budgeted sales volume. Direct materials. Each unit requires 2 pounds of raw materials at a cost of $9 per pound. Management desires to maintain raw materials inventories at 20% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 505,000 pounds. Pargo budgets 0.3 hours of direct labor per unit, labor costs at $11 per hour, and manufacturing overhead at $18 per direct labor hour. Its budgeted selling and administrative expenses for 2020 are $6,793,000. Calculate the budgeted total unit cost. (Round answer to 2 decimal places, e.g. 12.25.) Total unit cost $ eTextbook and Media Prepare the budgeted multiple step income statement for 2020. (Ignore income taxes.) PARGO COMPANY Budgeted Income Statement For the Year Ending December 31.2020 Sales Cost of Goods Sold Gross Profit Selling and Administrative Expenses Net Income Loss) # IS # 4 C 1 7
Pargo Company is preparing its budgeted income statement for 2020. 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 22%, 23%, 27%, and 28%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $46 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 13% higher than the budgeted sales for the first quarter of 2020. Production Management desires to maintain the ending finished goods inventories at 19% of the next quarter's budgeted sales volume. Direct materials. Each unit requires 2 pounds of raw materials at a cost of $9 per pound. Management desires to maintain raw materials inventories at 20% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 505,000 pounds. Pargo budgets 0.3 hours of direct labor per unit, labor costs at $11 per hour, and manufacturing overhead at $18 per direct labor hour. Its budgeted selling and administrative expenses for 2020 are $6,793,000. Calculate the budgeted total unit cost. (Round answer to 2 decimal places, e.g. 12.25.) Total unit cost $ eTextbook and Media Prepare the budgeted multiple step income statement for 2020. (Ignore income taxes.) PARGO COMPANY Budgeted Income Statement For the Year Ending December 31.2020 Sales Cost of Goods Sold Gross Profit Selling and Administrative Expenses Net Income Loss) # IS # 4 C 1 7
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Pargo Company is preparing its budgeted income statement for 2020. 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 22%, 23%, 27%, and 28%,
respectively. The sales price is expected to be $40 per unit for the first three quarters and $46 per unit beginning in
the fourth quarter. Sales in the first quarter of 2021 are expected to be 13% higher than the budgeted sales for the
first quarter of 2020.
Production Management desires to maintain the ending finished goods inventories at 19% of the next quarter's
budgeted sales volume.
Direct materials. Each unit requires 2 pounds of raw materials at a cost of $9 per pound. Management desires to
maintain raw materials inventories at 20% of the next quarter's production requirements. Assume the production
requirements for first quarter of 2021 are 505,000 pounds.
Pargo budgets 0.3 hours of direct labor per unit, labor costs at $11 per hour, and manufacturing overhead at $18 per
direct labor hour. Its budgeted selling and administrative expenses for 2020 are $6,793,000.
Calculate the budgeted total unit cost. (Round answer to 2 decimal places, e.g. 12.25.)
Total unit cost
$
eTextbook and Media
Prepare the budgeted multiple step income statement for 2020. (Ignore income taxes.)
PARGO COMPANY
Budgeted Income Statement
For the Year Ending December 31.2020
Sales
Cost of Goods Sold
Gross Profit
Selling and Administrative Expenses
Net Income Loss)
# IS
#
4
C
1
7
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