Question

Exercise 9-10 (Part Level Submission) 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 2020. January 10,400 $50.70 Estimated unit sales Sales price per unit Direct labor hours per unit Wage per direct labor hour February 11,800 $48.40 2.0 $7 March 8,700 $48.40 1.5 $ 7 April 8,300 $48.40 1.5 98 May 8,300 $48.40 1.5 $8 Lowell has a labor contract that calls for a wage increase to 58 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 16,300 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.

prepapre a budget for lowell company

prepare a direct labor budget for lowell company

Prepare a production budget for lowell company by month for the first quarter of the year

Answer 1

1)

LOWELL COMPANY
Production Budget
For the Quarter Ending March 31, 2020
	January	February	March	Quarter
Estimated unit sales	10400	11800	8700	30900
Add: Desired ending inventory	16150	12850	12450	12450
Total needs	26550	24650	21150	43350
Less: Beginning inventory	(16300)	(16150)	(12850)	(16300)
Required production in units	10250	8500	8300	27050

Calculation of Desired ending inventory

January= 11800*100%+8700*50%= 16150

February= 8700*100%+8300*50%= 12850

March= 8300*100%+8300*50%= 12450

2)

LOWELL COMPANY
Direct Labor Budget
For the Quarter Ending March 31, 2020
	January	February	March	Quarter
Required production in units	10250	8500	8300
Direct labor hours per unit	2.0	2.0	1.5
Total direct labor hours needed	20500	17000	12450
Direct labor cost per hour	$7	$7	$7
Total direct labor costs	$143500	119000	$87150	$349650