January February March April May (a) Jan Feb Mar Total Lowell Company makes and
ID: 2449549 • Letter: J
Question
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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 11,000 11,700 8,000 9,000 8,300 Sales price per unit $50.60 $48.20 $48.20 $48.20 $48.20 Direct labor hours per unit 2.4 2.4 1.7 1.7 1.7 Wage per direct labor hour $7.00 $7.00 $7.00 $8.00 $8.00Lowell 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 18,020 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. repare a production budget by quarters for the 6-month period ended June 30, 2017. HARDIN COMPANY Production Budget For the Six Months Ending June 30, 2017 Quarter 2 Year Co Expected Unit Sales 5000 6900 AddDesired Ending Finished Goods Unit 2000 Total Required Units Less :Beginning Finished Goods Unit Required Production Units
Explanation / Answer
Statement showing Production Budget Particulars Jan Feb Mar Apr May Total Unit Sales 11,000.00 11,700.00 8,000.00 9,000.00 8,300.00 30,700.00 Opening Stock 18,020.00 16,500.00 13,400.00 18,020.00 Closing Stock = Next month sale*1 + Next to next month sales*.60 16,500.00 13,400.00 13,980.00 13,980.00 Production=Sales+CS-OS 9,480.00 8,600.00 8,580.00 26,660.00 Labour hrs per unit 2.40 2.40 1.70 2.17 Total Labour Hrs 22,752.00 20,640.00 14,586.00 57,978.00 Total Labour Cost @7 159,264.00 144,480.00 102,102.00 405,846.00
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