Prepare a production budget for lowell company

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Reference no: EM131591503

Question - 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

10,000

11,000

8,000

8,000

8,000

Sales price per unit

$50.00

$47.00

$47.00

$47.00

$47.00

Direct labor hours per unit

2.0

2.0

1.5

1.5

1.5

Wage per direct labor hour

$7.00

$7.00

$8.00

$8.00

$8.00

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 14,400 frames on hand and has policy of carrying an end-of-month inventory of 100% of the Following month's sales.

Required - Prepare a production budget for Lowell Company by month and for the first quarter of the year.

Reference no: EM131591503

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