Sales budget by quarter for 2017 :
Pargo Company | |||||
Sales Budget | |||||
Quarter | |||||
1 | 2 | 3 | 4 | Year | |
Expected unit sale | 252,000 | 364,000 | 336,000 | 448,000 | 2017 |
18% of 1,400,000 | 26% of 1,400,000 | 24% of 1,400,000 | 32% of 1,400,000 | ||
Unit selling price($) | 40 | 40 | 40 | 46 | |
Total Sales($) | 10,080,000 | 14,560,000 | 13,440,000 | 20,608,000 | 58,688,000 |
(expected units*unit selling price) |
Production budget by quarter for 2017 :
Pargo Company | |||||
Production Budget | |||||
Quarter | |||||
1 | 2 | 3 | 4 | Year | |
Next quarter of budgeted sales volume | 364,000 | 336,000 | 448,000 | 277,200 | 2017 |
FG % to be maintained | 20% | 20% | 20% | 20% | |
Ending FG inventories | 72,800 | 67,200 | 89,600 | 55,440 | 285,040 |
expected sale units | 252,000 | 364,000 | 336,000 | 448,000 | |
Total Production units | 324,800 | 431,200 | 425,600 | 503,440 | 1,685,040 |
(Ending FG inventory + expected sale units) | |||||
Note: The 4th quarter budgeted sales volume is 0% of 2018 's 1st quarter sales volume. 1st quarter sales for 2018 is expected to be 10% higher than the 1st quarter sale of 2017. Hence 10% on 252,000 = 25,200. The next quarter budgeted sale volume for 4th quarter 2017 is 252,000+25,200 = 277,200 |
Direct Material Budget by quarters for 2017 :
Pargo Company | |||||
Direct Material Budget | |||||
Quarter | |||||
1 | 2 | 3 | 4 | Year | |
Next quarters production requirement | 431,200 | 425,600 | 503,440 | 505,000 | 2017 |
RM inventory % to be maintained | 10% | 10% | 10% | 10% | |
RM Inventory | 43,120 | 42,560 | 50,344 | 50,500 | |
Total Production units | 324,800 | 431,200 | 425,600 | 503,440 | |
Total pounds of RM required for producing total production units | 649,600 | 862,400 | 851,200 | 1,006,880 | |
(each unit requires 2 pounds of RM. So Total production units * 2) | |||||
Total RM requirement(in pounds) | 692,720 | 904,960 | 901,544 | 1,057,380 | |
(RM inventory + Total pounds of RM required for producing total production units) | |||||
Cost per pound of RM($) | 12 | 12 | 12 | 12 | |
Total Direct Material Cost($) | 8,312,640 | 10,859,520 | 10,818,528 | 12,688,560 | 42,679,248 |
(Total RM requirement*cost per pound of RM) | |||||
Note : For the 4th quarter, 1st quarter 2018 production requirement of 505,000 pounds is considered for computing RM inventory for 4th quarter |
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