Exercise 9-10 Lowell Company makes and sells artistic frames for pictures. The c

Question

Exercise 9-10 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 10,200 $50.20 2.0 $7.00 February March April May 8,600 8,900 Estimated unit sales Sales price per unit Direct labor hours per unit Wage per direct labor hour 8,400 $47.10 $47.10 $47.10 $47.10 1.6 $7.00$7.00 $8.00 $8.00 11,800 2.0 1.6 1.6 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 18,460 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 Jan Feb Mar Total

Explanation / Answer

Production budget :

Jan Feb Mar Total Sales units 10200 11800 8600 30600 Add: Desired ending inventory 17820 14830 14780 14780 Total needs 28020 26630 23380 45380 Less: Beginning inventory (18460) (17820) (14830) (18460) Production units 9560 8810 8550 26920

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