Answer:
Total Production Budget for the 1st quarter = 26900 units
Total Direct Labor Budget for the Quarter is $459972
Total Wages Jan. $ 173502 Feb. $165375 Mar. $ 121095
Explanation:
<u>Lowell Company </u>
<u>Production Budget for the 1st Quarter 2020</u>
January February March April May
Estimated unit sales 10,500 11,700 8,400 8,900 9,000
Add Desired
Ending Inventory 17580 14630 15200
Less
<u>Beginning Inventory 18900 17580 14630 </u>
<u>Production Budget 9180 8750 8970 </u>
<u>Total Production Budget for the 1st quarter = 26900 units</u>
<u>Ending Inventory Calculations:</u>
Jan Ending Inventory= Feb Sales + 70% March Sales
= 11,700 + 70% of 8,400= 17580
Feb Ending Inventory= Mar Sales + 70% Apr Sales
= 8,400 + 70% of 8,900= 14630
Mar Ending Inventory= April Sales + 70% May Sales
=8,900 + 70% of 9,000= 15200
<em>Ending Inventory of one month is the beginning inventory of the next month.</em>
<em></em>
<u>Lowell Company </u>
<u>Direct Labor Budget for the 1st Quarter 2020</u>
January February March
Production Budget 9180 8750 8970
<u>Direct labor Hrs/unit 2.1 2.1 1.5 </u>
Total DLH 19278 18375 13455
<u>Wage /DLH $9.00 $9.00 $9.00 </u>
<u>Total Wages $ 173502 $165375 $ 121095</u>
<u />
Total Direct Labor Budget for the Quarter is $459972
<em>We multiply the DLH per unit with number of units. Then the total DLH are multiplied with the wage per DLH to get the total direct labor wages.</em>