Exercise 21-10 Lowell Company makes and sells artistic frames for pictures. The

Question

Exercise 21-10 Lowell Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2017 January February March April May Estimated unit sales Sales price per unit Direct labor hours per 10,300 11,600 9,000 8,300 8,000 $50.30 $48.70 $48.70 $48.70 $48.70 2.3 1.6 1.6 1.6 $8.00 $8.00 $9.00 $9.00 2.3 unit Wage per direct labor $8.00 hour Lowell has a labor contract that calls for a wage increase to $9.00 per hour on April 1, New labor-saving machinery has been installed and will be fully operational by March 1 Lowell expects to begin the year with 16,100 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month's sales, plus 50% of the second following month's sales.

Explanation / Answer

1) Lowell Company

   Production Budget for First Quarter (in units)

2) Lowell Company

Direct Labor Budget for the first quarter (Amounts in $)

Particulars Jan Feb Mar Total Units sold 10,300 11,600 9,000 30,900 Add: Desired Ending Inventory (100% of next month sales plus 50% of second month following sales) 16,100 13,150 12,300 12,300 Total Production Needed 26,400 24,750 21,300 43,200 Less: Beginning Inventory (16,100) (16,100) (13,150) (16,100) Units required to be produced 10,300 8,650 8,150 27,100

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