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.
Lowell has a labor contract that calls for a wage increase to $9.00 per hour on April 1. New labor savings 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.
Instructions
Prepare 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.
Solution
