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

Question

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 unit Wage per direct labor hour 11,000 $50.60 2.4 $7.00 11,700 8,000 9,000 ,300 $48.20 $48.20 $48.20 48.20 1.7 $7.00 $7.00 $8.00 8.00 2.4 1.7 1.7 Lowell has a labor contract that calls for a wage increase to $8.00 per hour on April 1. New labor-saving machinery has been installed and wll be fully operational by March 1 Lowell expects to begin the year with 18 020 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. Prepare a production budget for Lowel Company by month and for the first quarter of the year LOWELL COMPANY Budget Jan Feb Mar Total Prepare a direct labor budget for Lowell Company by month and for the first quarter of the year. The direct labor budget should include direct labor hours. (Round Direct labor hours per unit answers to 1 decimal place, e.g. 52.7.) LOWELL COMPANY Direct Labor Budget Jan Feb Mar Total

Explanation / Answer

Production budget :

Direct labour budget :

Jan Feb Mar Total Sales unit 11000 11700 8000 30700 Add: Desired ending inventory 16500 13400 13980 13980 Total 27500 25100 21980 44680 Less: Beginning inventory unit -18020 -16500 -13400 -18020 Production units 9480 8600 8580 26660

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