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
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 | April | May | ||||||
Estimated unit sales | 10,300 | 11,400 | 8,200 | 8,100 | 8,700 | |||||
Sales price per unit | $50.80 | $48.20 | $48.20 | $48.20 | $48.20 | |||||
Direct labor hours per unit | 2.1 | 2.1 | 1.7 | 1.7 | 1.7 | |||||
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-saving machinery has been installed and will be fully operational by March 1. Lowell expects to begin the year with 17,140 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following months sales, plus 60% of the second following months sales.
Prepare a production budget for Lowell Company by month and for the first quarter of the year.
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