Question

The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company's products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company nas provided the following data: Product Debbie Trish Sarah Mike Sewing kit Demand Selling Next year Price (units) per Unit 72,000 $18.00 64,000 $ 6.50 57,000 $30.00 40,000 $15.00 347,000 $10.20 Direct Materials $4.90 $1.80 $9.74 $4.20 $5.40 Direct Labor $ 4.05 $ 1.89 $ 6.75 $ 4.95 $ 1.44 The following additional Information is available: a. The company's plant has a capacity of 155,110 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. b. The direct labor rate of $9 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $605,000 per year. Variable overhead costs are $5 per direct labor-hour. d. All of the company's nonmanufacturing costs are fixed. e. The company's finished goods inventory is negligible and can be ignored. Required: 1. How many direct labor hours are used to manufacture one unit of each of the company's five products? 2. How much variable overhead cost is incurred to manufacture one unit of each of the company's five products? 3. What is the contribution margin per direct labor-hour for each of the company's five products? 4. Assuming that direct labor-hours is the company's constraining resource, what is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource? 5. Assuming that the company has made optimal use of its 155,110 direct labor-hours, what is the highest direct labor rate per hour that Walton Toy Company would be willing to pay for additional capacity (that is, for added direct labor time)? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 How many direct labor hours are used to manufacture one unit of each of the company's five products? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Debbie Trish Sarah Mike Sewing Kit Direct labor hours per unit

Answer 1

Required: I How one many direct above hours are used to manufacture unit of each of Companies five products! un Disect Direct lobou hown leacire ! per unit Tabout particulars labo hour $) Ibisect labour per unit ) $4.05 -0.us how 59 Debbie $4.05 $1.89 = 0.21 hour Trish $ 1.89 $9 99 $ 9 sarah $6.75 $4.95 $6.75 -0.75 how $9 $4.95 -0.55 hours $ 9 amike Sewing kit $1.44 $9 $144 -0.16 hours $9 Required: 2 how much vasiiable manufacture one over head cost unit of each / oised 1 labour hours is incurred to of the 5 products variable ovee heads per unit ($) particulars variable oved heads per hour per $) Debbie $5 Trish $5 Sarah $5 ous his 5x0.45 = $2.25 localhre 5x0.2) = $1.05 10.75 has 5x0.75 = $3.75 loiss hers 5x0.55 = $2.75 10.16 has 5x0.16 = $0.8 - mike Sewing kit $5

mo mangin per - I Trish direct tabour hour Sarah for each chit of 5 products I mike sewing kit Realuired is contribution particulars Debbie Selling price per unit $ 18.00 - bileet materials $ 4.90 $ 6.50 $ 30.00 $15.00 $ 10-20 $5.40 $ 1.80 $ 4.20 $ 9.74 $ 1.44 labour ( Direct $ 4.05 $ 1.89 $ $ 9.95 6.75 avaliable ovelheads $ 0.8 8 2.85 $ 105 $ 3-75 $ 2.75 per unit $ 608 $1.76 $ 9.76 $ 3-1 $2.56 per unit conteibution ca 0.55 0.75 hours hours 0.81 hours o.us hours 0.16 hour houes reareired per unit $16 $8.38 T $ 13.01 $ 5.63 $15.1) contebution didect balow per how Rank

Realuired: 4 are optimally Wed / highest contribution that can be . (axb) Direct Labour Total hours demand peruni hos) reamised 3,47,000 Dolb house 55520 hours earned if dissect babous hours Remaining Direct lobou how 15510-55520 = 99 590 how Rank product kit Sewing kit o.ushours 32 you home 99590-32400 = 67 190 hour 72000 Debbie sarah - 57000 0.75hows 67190 -42350 = quuuo hours 48750 hour 0-21 hour 3440 hours gyuuo-13440 = 11000 hours 4 Toish 64000 11000-11000 > 0 mike (Note) 20000 (Refer Nore) mike : Note: hours semaining the 11000 hours, hours per unit 0.55 hours perunit Total units that can be manufactured by 11000 hours = 11000 - 20 0:55

Required: 4 continued Total Contribution contribution perunit units produced - product Sewing kit 347000 8.56 888 320 Debbie 92000 6.8 489, 600 556,320 9.76 sarah 57000 Trush 1.76 64000 112, 640 62000 31 mike 20000 0X900) $ 9,108, 880 0011

Realuired : 5 product : mike demand = 40000 units actual units - 20000 units produced so contaibukion per hour = $5-63. To produce the remaining 20000 units, we should have additional capacity of 11000 hourl C 20000 xosS hrs perunit). :: $5-63 is the highest rate that could be paid to per houe for additional capacity.