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 2020.

		January		February		March		April		May
Estimated unit sales		10,800		11,100		8,700		8,400		8,000
Sales price per unit		$50.50		$48.20		$48.20		$48.20		$48.20
Direct labor hours per unit		2.0		2.0		1.5		1.5		1.5
Wage per direct labor hour		$9		$9		$9		$10		$10

Lowell has a labor contract that calls for a wage increase to $10 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 16,350 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month’s sales, plus 50% 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 Year Ending March 31, 2020March 31, 2020For the Quarter Ending March 31, 2020
		Jan		Feb		Mar		Total
Total Materials RequiredDesired Ending Direct MaterialsDirect Materials PurchasesRequired Production UnitsTotal Required UnitsDesired Ending Finished Goods UnitBeginning Direct MaterialsDirect Materials Per UnitBeginning Finished Goods UnitExpected Unit Sales
AddLess:                                                                       Total Materials RequiredRequired Production UnitsTotal Required UnitsExpected Unit SalesDesired Ending Direct MaterialsDirect Materials Per UnitDirect Materials PurchasesBeginning Finished Goods UnitDesired Ending Finished Goods UnitBeginning Direct Materials
Desired Ending Finished Goods UnitRequired Production UnitsBeginning Direct MaterialsDirect Materials Per UnitDesired Ending Direct MaterialsTotal Required UnitsExpected Unit SalesTotal Materials RequiredDirect Materials PurchasesBeginning Finished Goods Unit
AddLess:                                                                       Total Required UnitsTotal Materials RequiredExpected Unit SalesBeginning Finished Goods UnitRequired Production UnitsDirect Materials Per UnitDirect Materials PurchasesBeginning Direct MaterialsDesired Ending Direct MaterialsDesired Ending Finished Goods Unit
Desired Ending Direct MaterialsBeginning Direct MaterialsRequired Production UnitsBeginning Finished Goods UnitDirect Materials Per UnitTotal Required UnitsTotal Materials RequiredExpected Unit SalesDesired Ending Finished Goods UnitDirect Materials Purchases

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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.)

LOWELL COMPANY Direct Labor Budget                                                                       For the Quarter Ending March 31, 2020For the Year Ending March 31, 2020March 31, 2020
		Jan		Feb		Mar		Total
Total Materials RequiredDirect Labor Time (Hours) Per UnitCost Per PoundTotal Pounds Required for ProductionTotal Direct Labor CostDirect Materials PurchasesDesired Ending InventoryTotal Required Direct Labor HoursDirect Materials Per UnitDirect Labor Cost Per HourTotal Cost of Direct Materials PurchasesBeginning Materials InventoryUnits to be Produced
Direct Materials PurchasesBeginning Materials InventoryCost Per PoundDirect Labor Cost Per HourDirect Labor Time (Hours) Per UnitTotal Cost of Direct Materials PurchasesDirect Materials Per UnitTotal Materials RequiredTotal Direct Labor CostTotal Required Direct Labor HoursTotal Pounds Required for ProductionUnits to be ProducedDesired Ending Inventory
Direct Labor Time (Hours) Per UnitTotal Materials RequiredDirect Materials PurchasesDirect Materials Per UnitTotal Required Direct Labor HoursBeginning Materials InventoryTotal Direct Labor CostCost Per PoundDirect Labor Cost Per HourTotal Cost of Direct Materials PurchasesDesired Ending InventoryUnits to be ProducedTotal Pounds Required for Production
Total Required Direct Labor HoursTotal Direct Labor CostDirect Labor Cost Per HourCost Per PoundBeginning Materials InventoryUnits to be ProducedDirect Labor Time (Hours) Per UnitDirect Materials PurchasesTotal Cost of Direct Materials PurchasesDirect Materials Per UnitDesired Ending InventoryTotal Materials RequiredTotal Pounds Required for Production		$		$		$
Cost Per PoundDirect Materials Per UnitTotal Cost of Direct Materials PurchasesDirect Materials PurchasesBeginning Materials InventoryUnits to be ProducedTotal Materials RequiredDirect Labor Cost Per HourTotal Required Direct Labor HoursDirect Labor Time (Hours) Per UnitDesired Ending InventoryTotal Pounds Required for ProductionTotal Direct Labor Cost		$		$		$		$

Answer 1