Reference no: EM133006483

Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production and direct materials budgets are as follows. Sales for the year are expected to total 1,700,000 units. Quarterly sales are 22%, 27%, 27 % and 24% respectively. The sales price is expected to be $42 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 15% higher than the budgeted sales for the first quarter of 2020. Production management desires to maintain the ending finished goods inventories at 20% of the next quarters budgeted sales volume, Direct materials each unit requires 2 pounds of row materials at a cost of $12 per pound. Management desires to maintain row materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 493,000 pounds.

Problem 1: Prepare the Sales, Production and Direct Materials Budget by quarters for 2020.