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 Janua Februar March April May Estimated unit sales Sales price per unit Direct labor hours per unit Wage per direct labor hour 10,400 $50.90 2.2 $8.00 11,000 8,700 8,000 8,500 $48.10 $48.10 $48.10 $48.10 2.2 1.6 $8.00 $8.00 $9.00 $9.00 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 14,800 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month's sales, plus 40% of the second following month's sales. Prepare a production budget for Lowell Company by month and for the first quarter of the year LOWELL COMPANY Production Budget eb ar 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

Lowell Company Production budget For the quarter ending March 31 2017 Jan Feb March Total Estimated unit sales             10,400            11,000              8,700              30,100 ADD : Desired ending inventory             14,480            11,900            11,400              37,780 Total Needs             24,880            22,900            20,100              67,880 LESS : Begning Inventory             14,800            14,480            11,900              41,180 Number of units produced             10,080              8,420              8,200              26,700 Lowell Company Production budget For the quarter ending March 31 2017 Jan Feb March Total Production in units             10,080              8,420              8,200              26,700 Direct labor hours per unit                 2.20                 2.20                 1.60                   6.00 Total hours needed             22,176            18,524            13,120              53,820 Rate per hour                       8                       8                       8                      24 Total direct labor         1,77,408        1,48,192        1,04,960          4,30,560

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