Donnegal Company makes and sells artistic frames for pictures. The controller is

Question

Donnegal Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2014. January February March April May Estimated unit sales 10,000 11,300 8,700 8,700 9,000 Sales price per unit $50.7 $47.1 $47.1 $47.1 $47.1 Direct labor hours per unit 2.1 2.1 1.7 1.7 1.7 Wage per direct labor hour $9 $9 $9 $10 $10 Donnegal has a labor contract that calls for a wage increase to $10 per hour on April 1. New labor-saving machinery has been installed and will be fully operational by March 1. Donnegal expects to begin the year with 16,780 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month’s sales, plus 60% of the second following month’s sales. Collapse question part (a) Prepare a production budget for Donnegal Company by month and for the first quarter of the year. DONNEGAL COMPANY Production Budget For the Quarter Ending March 31, 2014 Jan Feb Mar Total : : LINK TO TEXT

Explanation / Answer

Donnegal Company Production Budget for first quarter 2014. Details Jan Feb Mar Total Qtr Apr May Estimated Sales Units                 10,000             11,300              8,700            30,000             8,700                9,000 Add Required Ending Inventory units                 16,520             13,920            14,100             9,000                       -   Less Opening Inventory of Month units                 16,780             16,520            13,920 Production Required for the month units                   9,740               8,700              8,880            27,320

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