Concept explainers
Pargo Company is preparing its
In addition, Pargo budgets 0.3 hours of direct labor per unit, labor costs at $15 per hour, and manufacturing overhead at $20 per direct labor hour. Its budgeted selling and administrative expenses for 2017 are $6,000,000.
(a) Calculate the budgeted total unit cost.
(b) Prepare the budgeted multiple-step income statement for 2017. (Ignore income taxes.)
DO IT! 9-2 Pargo Company is preparing its
Sales. Sales for the year are expected to total 1,000,000 units. Quarterly sales are 20%, 25%, 25%, and 30%, 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 2018 are expected to be 20% higher than the budgeted sales for the first quarter of 2017.
Production. Management desires to maintain the ending finished goods inventories at 25% 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 2018 are 450,000 pounds.
Prepare the sales, production, and direct materials budgets by quarters for 2017.
Want to see the full answer?
Check out a sample textbook solutionChapter 9 Solutions
Managerial Accounting, Binder Ready Version: Tools for Business Decision Making
Additional Business Textbook Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Intermediate Accounting
Financial Accounting, Student Value Edition (5th Edition)
Construction Accounting And Financial Management (4th Edition)
Horngren's Accounting (11th Edition)
Financial Accounting, Student Value Edition (4th Edition)
- The Sales Department of Minimus Inc. has forecast sales for May 2016 to be 40,000 units. Additional information follows: Materials used in production: Direct labor hours required in production: Prepare the following: a. A production budget for May. b. A direct materials budget for May. c. A direct labor budget for May.arrow_forwardRoman Inc. has the following totals from its operating budgets: Prepare a budgeted income statement for the year ended December 31, 2016, assuming that income from operations is taxed at a rate of 30%.arrow_forwardBudgeted selling and administrative expenses for King Tire Co. In P7-2 for the year ended December 31, 2016, were as follows: Required: 1. Prepare a selling and administrative expense budget, in good form, for the year 2016. 2. Using the information above and the budgets prepared in P7-2, prepare a budgeted income statement for the year 2016, assuming an income tax rate of 40%.arrow_forward
- Mesa Aquatics, Inc. estimated direct labor hours as 1,900 in quarter 1, 2,000 in quarter 2.2,200 in quarter 3, and 1,800 in quarter 4. a sales and administration budget using the information provided.arrow_forwardAt the beginning of the period, the Fabricating Department budgeted direct labor of 72,000 and equipment depreciation of 18,500 for 2,400 hours of production. The department actually completed 2,350 hours of production. Determine the budget for the department, assuming that it uses flexible budgeting.arrow_forwardConcord Company is preparing its manufacturing overhead budget for 2025. Relevant data consist of the following. Units to be produced (by quarters): 11,200, 13,440, 15,680, 17,920. Direct labor: Time is 3.00 hours per unit. Variable overhead costs per direct labor hour: indirect materials $1.60; indirect labor $2.40; and maintenance $1.00. Fixed overhead costs per quarter: supervisory salaries $46,200; depreciation $16,800; and maintenance $13,440. Prepare the manufacturing overhead budget for the year, showing quarterly data. (Round overhead rate to 2 decimal place: 1.25. List variable expenses before fixed expense.) A $ 1 LA CONCORD COMPANY Manufacturing Overhead Budget 2 Quarter LA 3arrow_forward
- Crane Company is preparing its manufacturing overhead budget for 2022. Relevant data consist of the following. Units to be produced (by quarters): 10,600, 12,720, 14,840, 16,960. Direct labor: Time is 1.50 hours per unit. Variable overhead costs per direct labor hour: indirect materials $0.8; indirect labor $1.2; and maintenance $0.5. Fixed overhead costs per quarter: supervisory salaries $43,725; depreciation $15,900; and maintenance $12,720. Prepare the manufacturing overhead budget for the year, showing quarterly data. (Round overhead rate to 2 decimal places, e.g. 1.25. List variable expenses before fixed expense.) CRANE COMPANY Manufacturing Overhead Budgetarrow_forwardChubbs Inc.’s manufacturing overhead budget for the first quarter of 2020 contained the following data. Variable Costs Fixed Costs Indirect materials $11,300 Supervisory salaries $36,600 Indirect labor 10,600 Depreciation 7,700 Utilities 7,700 Property taxes and insurance 8,000 Maintenance 5,700 Maintenance 5,300 Actual variable costs were indirect materials $15,300, indirect labor $9,300, utilities $9,600, and maintenance $5,100. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $9,100. The actual activity level equaled the budgeted level.All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance.(a) Prepare a manufacturing overhead flexible budget report for the first quarter. (List variable costs before fixed costs.) CHUBBS INC.Manufacturing Overhead Flexible Budget ReportFor the Quarter Ended March 31, 2020…arrow_forwardThe followings are the budget for next financial year (1 January 2023 - 31 December 2023), indicating the average selling price and variable costs of each product category. The common fixed manufacturing overhead and the fixed non-manufacturing overhead costs are estimated to be $1,250,000 and $2,778,320 respectively. Table 1: Budget Jan - Dec 2023 Sales Quantity (in units) In $ Unit selling price Unit production cost Unit selling & admin variable costs (5% of selling price) In $ Revenue Variable Production Costs Selling & Admin Variable Costs Model 1 8,400 600 250 30 Folding Bike Model 2 7,500 400 180 20 Model 3 3,500 480 200 24 Electric Bike 800 2,000 850 100 Total 20,200 5,040,000 3,000,000 1,680,000 1,600,000 11,320,000 (2,100,000)| (1,350,000)| (700,000)| (680,000)| (4,830,000) (252,000) (150,000) (84,000) (80,000) (566,000) Q1. Based on the above budgeted information, calculate the expected breakeven units for the Model 2 folding bikes.arrow_forward
- Kirkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2017, the following data are available. 1. Sales: 20,800 units quarter 1; 22,100 units quarter 2. 2. Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 3%. 3. Fixed costs per quarter: sales salaries $10,900, office salaries $6,160, depreciation $4,490, insurance $2,080, utilities $880, and repairs expense $670. 4. Unit selling price: $24. Prepare a selling and administrative expense budget by quarters for the first 6 months of 2017. KIRKLAND COMPANY Selling and Administrative Expense Budget For the Six Months Ending June 30, 2017 : Quarter Budgeted Sales in Units Variable Expenses Sales Commissions Delivery Expense Advertising Total Variable Fixed Expenses Sales Salaries Office Salaries Depreciation Insurance Utilities Repairs Expense Total Fixed 3 Selling and Administrative Expenses • Six Months 300…arrow_forwardSarasota Company is preparing its manufacturing overhead budget for 2022. Relevant data consist of the following. Quarterly units production: Q1-9,800, Q2-11,100, Q3-13,000, Q4-15,400. unit. Direct labor: Labor required is 1 hour per Variable overhead costs per direct labor hour: Indirect materials $0.80; indirect labor $1.10; and maintenance $0.50. Fixed overhead costs per quarter: Supervisory salaries $40,500; depreciation $16,700; and maintenance $11,000. Prepare the manufacturing overhead budget for the year, showing quarterly data. (List variable costs before fixed costs.) First Quarter SARASOTA COMPANY Manufacturing Overhead Budget Second Quarter 1 Qıarrow_forwardShrek & Fiona Company, manufacturer of a single product, is preparing their annual budget for 2021:Requirements:Estimate manufacturing costs and operating expensesa. Purchases (material) budgetb. Personnel budgetc. Overhead budgetd. Selling and administrative budgetarrow_forward
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College