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 unit Wage per direct labor hour 10,700 $50.60 2.1 11,000 9,000 8,700 8,900 $47.90 2.1 1.5 1.5 1.5 $7.00 $7.00 $7.00 8.00 $8.00 $47.90 $47.90 $47.90 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 be the year with 18,400 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the foewing months sales, pus 70% of the second tlowing months sies.

Answer 1

1	Production budget	January	February	March	1st quarter total
	Budgeted sales	10,700	11000	9000	30700
Add	Ending inventory	17300	15090	14930	14930
	Total needs	28,000	26,090	23930	45630
Less	beginning inventory	18400	17300	15090	18400
	Units to be produced	9,600	8,790	8,840	27230
2	direct labor budget	January	February	March	1st quarter total
	Production budget units	9,600	8,790	8,840	27,230
	Per unit direct hours required	2.1	2.1	1.5
	Total labor hours needed	20160	18459	13260
	Labor price per hour	7	7	7
	Labor dollars	141120	129213	92820	363153