Exercise 21-10 Lowell Company makes and sells artistic frames for pictures. The

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.

Explanation / Answer

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

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