Soft and Cuddly Friends (SCF) produces soft dolls. Demand for the dolls is incre

Question

Soft and Cuddly Friends (SCF) produces soft dolls. Demand for the dolls is increasing, and management wants you to identify an economical sales and production mix for the coming year. The following information is available:

The company’s plant has a capacity of 120,000 direct labour-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.

The direct labour rate is $16 per hour; this rate is expected to remain unchanged during the coming year.

Fixed manufacturing costs amount to $790,000 per year. Variable overhead costs are $5 per direct labour-hour.

How many total direct labour-hours will be required to produce the units estimated to be sold during the coming year? Show your computations. (Round your answers to 2 decimal places.)

Keeping in mind the direct labour-hour capacity, what should be the company’s product mix for the upcoming year? Prepare a schedule in support of your recommendation. (Round "Per Unit" to 2 decimal places.)

What is the highest price, in terms of a rate per hour, that SCF would be willing to pay for additional capacity (i.e., for added direct labour time)?

Assume again that the company does not want to reduce sales of any product. Identify ways the company could obtain the additional output. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Soft and Cuddly Friends (SCF) produces soft dolls. Demand for the dolls is increasing, and management wants you to identify an economical sales and production mix for the coming year. The following information is available:

Explanation / Answer

Softy Friendly Goody Besty Lovey Total Demand (units) D 81000 67600 56700 64800 115400 Price per unit 39 32 29 20 25 $ Variable costs:       Direct materials 3.9 3.1 5.9 4.4 2.7       Direct labour L 6.4 4 11.2 8 3.2 No. of Direct labor hours per unit N= L/16 0.40 0.25 0.70 0.50 0.20 No. of direct labor hours required d*N 32400 16900 39690 32400 23080 144470 ans 1 Softy Friendly Goody Besty Lovey direct labour-hours will be required 32400 16900 39690 32400 23080 total direct labour-hours will be required 144470 ans 2 Softy Friendly Goody Besty Lovey Total Price per unit 39 32 29 20 25 $ Variable costs:       Direct materials 3.9 3.1 5.9 4.4 2.7       Direct labour L 6.4 4 11.2 8 3.2 Variable overhead 2 1.25 3.5 2.5 1 (5*.4) (5*.25) (5*.7) (5*.5) Contribution margin per unit C 26.7 23.65 8.4 5.1 18.1 CM per DLH C.N 66.75 94.6 12 10.2 90.5 Ranking 3 1 4 5 2 No. of direct labour required 32400 16900 39690 7930 23080 (120000-112070) Product mix 81000 67600 56700 15860 115400 (7930/.5) ans 3 SCF would give the highest price of rate per hour $16+10.2 (for Besty additional hours required) 26.2 ans 4 The correct options are Eliminating wasted labour time in the production process Utilizing the unutilized capacity Working overtime Contracting out some work to outside suppliers

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