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

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Concept explainers

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.

Question

(b)
Prepare the budgeted multiple-step income statement for 2020. (Ignore income taxes)
PARGO COMPANY
Budgeted Income Statement
eTextbook and Media

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%, 277%, and 29%, 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. Saies 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 59 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 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 $6,929,000.
(a)
Your answer is correct.
Calculate the budgeted total unit cost. (Round answer to 2 decimal places, eg 12.25)
Total unit cost
23.8
eTextbook and Media
Attempts: 1 of 3 used
Using multiple attempts will impact your score.
596 score reduction after attempt 2

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