Question

Question 25 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. Estimated unit sales Sales price per unit Direct labor hours per unit Wage per direct labor hour January 10,400 $50.80 2.0 $7.00 February 11,500 $48.20 2.0 $7.00 March 8,000 $48.20 1.5 $7.00 April 8,400 $48.20 1.5 $8.00 May 8,100 $48.20 1.5 $8.00 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 will be fully operational by March 1. Lowell expects to begin the year with 18,450 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month's sales, plus 70% 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 Feb Mar Total ENGO to search pou

Answer 1

Production Budget
	Jan	Feb	Mar	Total
Estimated Sales Units	10,400	11,500	8,000	29,900
Add: Desired Ending Inventory	17,100	13,880	14,070	14,070
Total required	27,500	25,380	22,070	43,970
Less: Beginning Inventory	18,450	17,100	13,880	18,450
Required Production	9,050	8,280	8,190	25,520
Direct Labor Budget
	Jan	Feb	Mar	Total
Required Production	9,050	8,280	8,190	25,520
Hours per unit	2	2	2
Total hours required	18,100	16,560	12,285	46,945
Rate per hour	7	7	7	7
Budgeted Direct labor cost	126,700	115,920	85,995	328,615

Note: Ending inventory of one month is equal to beginning in inventory of next month