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 1,800,000 units. Quarterly sales are 20%, 24%, 2776, and 299%, respectively. The sales price is expected to be $41 per unit for the first three quarters and 546 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 12% higher than the budgeted sales for the first quarter of 2020. Production. Management desires to maintain the ending finished goods inventories at 199%6 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 10% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 497,000 pounds. Pargo budgets 0.2 hours of direct iabor 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 $6,929,000.

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 1,800,000 units. Quarterly sales are 20%, 24%, 2776, and 299%, respectively. The sales price is expected to be $41 per unit for the first three quarters and 546 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 12% higher than the budgeted sales for the first quarter of 2020. Production. Management desires to maintain the ending finished goods inventories at 199%6 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 10% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 497,000 pounds. Pargo budgets 0.2 hours of direct iabor 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 $6,929,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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