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Product Demand Next Year Units Selling Price Per Unit Direct Materials Direct Labor Debbie

Product

Demand Next Year (Units)

Selling Price Per Unit Direct Materials Direct Labor
Debbie 75,000 $28.00 $5.20 $4.80
Trish 67,000 $5.70 $2.10 $1.36
Sarah 60,000 $33.50 $10.19 $7.20
Mike 65,000 $18.00 $4.50 $5.60
Sewing Kit 350,000 $10.50 $5.70 $0.96
The following additional information is available:
a.

The companyAc€?cs plant has a capacity of 185,290 direct labor-hours per year on a single-shift basis. The companyAc€?cs present employees and equipment can produce all five products.

b. The direct labor rate of $8 per hour is expected to remain unchanged during the coming year.
c. Fixed costs total $635,000 per year. Variable overhead costs are $4 per direct labor-hour.
d. All of the company's nonmanufacturing costs are fixed.
e. The companyAc€?cs finished goods inventory is negligible and can be ignored.

QUESTION 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  

QUESTION 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:  

QUESTION 3:

Based on response to Requirement 1 & 2, how much of 185,290 direct labor hours of capacity will be allocated to Walton Toy CompanyAc€?cs various products?

Product Hours:
Debbie  
Trish  
Sarah  
Mike  
Sewing Kit  

QUESTION 4:

What is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource?

Total Contribution Margin: ____________________

QUESTION 5:

What is the highest price, in terms of a rate per hour, that Walton Toy Company would be willing to pay for additional capacity (that is, for added direct labor time)? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Highest price ________________ per hour

May 21 2020 View more View Less

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