The Walton Toy Company manufactures a line of dolls and a doll dress sewing kit.

Question

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:

The company's plant has a capacity of 155,150 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products.

1 .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)?

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:

Explanation / Answer

Sales price $35 Variable costs Direct Material 3.70 Direct Labor 3.60 Variable Overheads 0.90 (0.3 hrs x $3 per hour) Total Variable costs 8.20 Contribution margin 26.80 Labor hour per unit 0.3 Contribution per labor hour 89.33 Total hours available 152,550 Hours required for production of 1st Rank product Balance hours available for other products Hours required for production of 2nd Rank product Balance hours available for other products Hours required for production of 3rd Rank product ..... And so on until you reach the least number of hours available

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