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 100,400 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.

The company’s finished goods inventory is negligible and can be ignored.

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

Calculate the the total direct labor-hours that will be required to produce the units estimated to be sold during the coming year.

Based on response to Requirement 1 & 2, how much of 100,400 direct labor hours of capacity will be allocated to Walton Toy Company’s various products?

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

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.)

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

CALCULATION OF CONTRIBUTION PER HR Product Demand Selling Direct Direct Contribution p.u Direct Contribution p.hr Next year Price Materials Labor Labor (units) per Unit per unit   Debbie 69,000 $41.00 $4.60    $4.00    $32.40 2 hr 16.2   Trish 61,000 $ 4.50 $1.50    $1.00    2 0.5 hr 4   Sarah 54,000 $30.50 $9.29    $7.00    14.21 3.5 hr 4.06   Mike 46,800 $15.00 $3.90    $5.00    6.1 2.5 hr 2.44   Sewing kit 344,000 $ 9.90 $5.10    $0.50    4.3 0.25 hr 17.2 CALCULATION OF TOTAL HRS Product Demand Direct Total hrs required Next year Labor (units) per unit   Debbie 69,000                     2.00 hr 138000   Trish 61,000                     0.50 hr 30500   Sarah 54,000                     3.50 hr 189000   Mike 46,800                     2.50 hr 117000   Sewing kit 344,000                     0.25 hr 86000 TOTAL HRS REQUIRED 560500 CALCULATION OF UNITS TO BE PRODUCED TO GIVE MAX MARGIN Product Contribution p.hr Ranking for production total hrs required if dd met no of hrs allocated on basis of ranking units produced [total hrs available /hrs p.u   Debbie 16.2 II 138000 14400 7200   Trish 4 IV 30500 0   Sarah 4.06 III 189000 0   Mike 2.44 V 117000 0   Sewing kit 17.2 I 86000 86000 ######## 100400 CALULATION OF CONTRIBUTION UNITS PRODUCED CONTRIBUTION / UNIT TOTAL CONTRIBUTION   Debbie 7200 $32 $233,280   Sewing kit 344000 $4 $1,479,200 $1,712,480

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