Exercise 9-10 (Part Level Submission) Lowell Company makes and sells artistic fr
ID: 2574616 • Letter: E
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 2017. January February March 8,000 April May Estimated unit sales Sales price per unit Direct labor hours per unit Wage per direct labor hour 10,400 $50.80 2.0 $7.00 11,500 8,100 $48.20 $48.20 $48.20 $48.20 1.5 $7.00$7.00$8.00 $8.00 8,400 2.0 1.5 1.5 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 18,450 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.Explanation / Answer
LOWELL COMPANY Production Budget For the quarter ending March 31, 2017 Jan Feb Mar Total Sales in units 10,400 11,500 8,000 29,900 Add: Desired Ending inventory 11,500+(8,000*70%) = 17,100 8,000+(8,400*70%) = 13,880 8,400+(8,100*70%) = 14,070 8,400+(8,100*70%) = 14,070 Total needs 27,500 25,380 22,070 43,970 Less: Beginning inventory 18,450 11,500+(8,000*70%) = 17,100 8,000+(8,400*70%) = 13,880 18,450 Required production unit 9,050 8,280 8,190 25,520
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