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The Walton Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the dolls is increasing, and management requests assistance from you in determining an economical sales and

The Walton Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the dolls is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data:

  

Product Demand
Next year
(units)
Selling
Price
per Unit
Direct
Materials
Direct
Labor
Debbie 70,000 $38.00 $4.70 $3.50
Trish 62,000 $ 4.60 $1.60 $1.00
Sarah 55,000 $31.00 $9.44 $6.50
Mike 48,000 $14.00 $4.00 $4.50
Sewing kit 345,000 $ 10.00 $5.20 $0.50

 

 

The following additional information is available:  

 

  1. The company’s plant has a capacity of 94,500 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products. 
  2. The direct labor rate of $10 per hour is expected to remain unchanged during the coming year.
  3. Fixed costs total $585,000 per year. Variable overhead costs are $3 per direct labor-hour.
  4. All of the company's nonmanufacturing costs are fixed.
  5. The company’s finished goods inventory is negligible and can be ignored.

 

Required:

1. Determine the contribution margin per direct labor-hour expended on each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 
 
Product Contribution Margin per DLH
Debbie  
Trish  
Sarah  
Mike  
Sewing kit  

 

2. Calculate the the total direct labor-hours that will be required to produce the units estimated to be sold during the coming year. (Do not round intermediate calculations.)

 
 
Product Total Hours
Debbie  
Trish  
Sarah  
Mike  
Sewing Kit  
Total hours required  

3. Based on response to Requirement 1 & 2, how much of 94,500 direct labor hours of capacity will be allocated to Walton Toy Company’s various products?

 
 
Product Hours
Debbie  
Trish  
Sarah  
Mike  
Sewing kit  
 

Sep 12 2020 Read more Less More

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