The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for

Question

The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company's products 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 Demand Selling Next year Price Direct Product Debbie Trish Sarah Mike Sewing kit 6e,000 $19.58 52,000 $ 6.00 45,000 33.06e 52,000 $13.00 335,900 9.ee Direct (units) per Unit Materials Labor $ 2.80 $ 1.20 $ 5.20 $3.60 $ 0.80 $5.30 $2.10 $7.94 $3.00 $4.20 The following additional information is available a. The company's plant has a capacity of 103,250 direct labor-hours per year on a single-shift basis. The company's 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 manufacturing costs total $620,000 per year. Variable overhead costs are $5 per direct labor-hour. d. All of the company's nonmanufacturing costs are fixed e. The company's finished goods inventory is negligible and can be ignored

Explanation / Answer

Req 1: Debbie Trish Sarah Mike Sewing kit Direct labour cost 2.80 1.20 5.20 3.60 0.80 labour rate per hour 8.00 8.00 8.00 8.00 8.00 Hours required per unit 0.35 0.15 0.65 0.45 0.10 Req 2: Debbie Trish Sarah Mike Sewing kit Direct labour cost 2.80 1.20 5.20 3.60 0.80 labor rate per hour 8.00 8.00 8.00 8.00 8.00 Hours required per unit 0.35 0.15 0.65 0.45 0.10 variable Oh per hour 5.00 5.00 5.00 5.00 5.00 Variable Cost per unit 1.75 0.75 3.25 2.25 0.50 Req 3: Debbie Trish Sarah Mike Sewing kit Selling Price per unit 19.50 6.00 33.00 13.00 9.00 Less: Variable cost Material 5.30 2.10 7.94 3.00 4.20 labour 2.80 1.20 5.20 3.60 0.80 Variable Oh 1.75 0.75 3.25 2.25 0.50 Contribution margin per unit 9.65 1.95 16.61 4.15 3.50 Labour hour per unit 0.35 0.15 0.65 0.45 0.10 Contribution margin per hour 27.57 13.00 25.55 9.22 35.00 Ranking II IV III V I Req 4: Total labour hourrs available 103250 Less: Utilized as per ranking Sewing Kit (335000*0.10) 33500 Debbie (60000*0.35) 21000 Sarah (45000*0.65) 29250 Trish (52000*0.15) 7800 Hours available for mike 11700 Contribution earned: Product Hours utilised CM per hour Total contribution Debbie 21000 27.57 578970 Trish 7800 13 101400 Sarah 29250 25.55 747337.5 Mike 11700 9.22 107874 Sewing kit 33500 35 1172500 Total Contribution margin 2708082 Req 5: Additional hours will be utilized in Mike production. Therefore,, management is ready to pay additional amount upto contribution per hour earned from Mike. Maximum rate per hour: Existing rate 8 Contribution margin per hr 9.22 Maximum rate per hour: 17.22

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.