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		10,400		11,000		8,700		8,000		8,500
Sales price per unit		$50.90		$48.10		$48.10		$48.10		$48.10
Direct labor hours per unit		2.2		2.2		1.6		1.6		1.6
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 14,800 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.

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

LOWELL COMPANY Production Budget                                                                       For the Quarter Ending March 31, 2017March 31, 2017For the Year Ending March 31, 2017
		Jan		Feb		Mar		Total
Desired Ending InventoryBeginning Direct MaterialsTotal NeedsDirect Labor Hours Per UnitRate Per HourTotal Cost of Direct Materials PurchasesCost Per PoundDesired Ending Direct MaterialsRequired Production UnitsDirect Materials PurchasesTotal Direct LaborTotal Hours NeededSales in UnitsTotal Materials RequiredBeginning Inventory
AddLess:                                                                       Beginning InventoryTotal NeedsBeginning Direct MaterialsTotal Hours NeededSales in UnitsRequired Production UnitsCost Per PoundDirect Labor Hours Per UnitDesired Ending Direct MaterialsDesired Ending InventoryTotal Cost of Direct Materials PurchasesRate Per HourTotal Materials RequiredTotal Direct LaborDirect Materials Purchases
Sales in UnitsCost Per PoundBeginning InventoryBeginning Direct MaterialsDirect Materials PurchasesTotal Cost of Direct Materials PurchasesRequired Production UnitsRate Per HourTotal Hours NeededDesired Ending Direct MaterialsDesired Ending InventoryTotal NeedsDirect Labor Hours Per UnitTotal Direct LaborTotal Materials Required
AddLess:                                                                       Total Cost of Direct Materials PurchasesTotal Direct LaborDesired Ending Direct MaterialsBeginning Direct MaterialsTotal Materials RequiredSales in UnitsCost Per PoundTotal Hours NeededRequired Production UnitsDirect Labor Hours Per UnitDirect Materials PurchasesBeginning InventoryRate Per HourDesired Ending InventoryTotal Needs
Desired Ending InventoryDirect Labor Hours Per UnitTotal Direct LaborTotal Hours NeededBeginning Direct MaterialsRate Per HourTotal NeedsCost Per PoundBeginning InventoryDesired Ending Direct MaterialsTotal Materials RequiredDirect Materials PurchasesTotal Cost of Direct Materials PurchasesSales in UnitsRequired Production Units

Answer 1