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 2025.

Lowell has a labor contract that calls for a wage increase to $9.00 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 17,600 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month’s sales, plus 40% of the second following month’s sales.

InstructionsPrepare a production budget and 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.

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Estimated unit sales Unit selling price Direct labor hours per unit Direct labor cost per hour January 12,000 $50.00 2.0 $8.00 February 14,000 $47.50 2.0 $8.00 March April 13,000 11,000 $47.50 $47.50 1.5 $8.00 1.5 $9.00 May 11,000 $47.50 1.5 $9.00