Managerial Accounting: E23-10 Lowell Company makes and sells artistic frames for pictures

Managerial Accounting

E23-10
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 10,900 11,900 8,200 8,700 8,100
Sales price per unit $50.20 $48.00 $48.00 $48.00 $48.00
Direct labor hours per unit 2.3 2.3 1.5 1.5 1.5
Wage per direct labor hour $8.00 $8.00 $8.00 $9.00 $9.00

Lowell has a labor contract that calls for a wage increase to $9.00 per hour on April 1. New labor-savings machinery has been installed and will be fully operational by March 1.
Lowell expects to beging the year with 19,230 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.

Instructions:
a. Prepare a production budget for Lowell Company by month and for the first quarter of the year.
b. Prepare a direct labor budget for Lowell Company by month and for the first quarter of the year. The direct labor budget should include direct labor hours. (Round Direct labor hours per unit answers to 1 decimal place, e.g. 52.7.)
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