I need HELP with numbers 3 & 4 Please The Walton Toy Company manufactures a line

Question

I need HELP with numbers 3 & 4 Please

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 following additional information is available:   

The company’s plant has a capacity of 130,000 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.

The direct labor rate of $8 per hour is expected to remain unchanged during the coming year.

Fixed costs total $520,000 per year. Variable overhead costs are $2 per direct labor-hour.

All of the company's nonmanufacturing costs are fixed.

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

  

Required:

1. Determine the contribution margin per direct labor-hour expended on each product. (Do not round interme I need help with steps on how to complete these questions. I have this answer

Debbie 13.00 Trish 7.60 Sarah 10.80 Mike 6.00 Sewing kit 14.00

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.)

Debbie 20,000 Trish 10,500 Sarah 24,500 Mike 20,000 Sewing kit 65,000

3. Based on response to Requirement 1 & 2, how much of 130,000 direct labor hours of capacity will be allocated to Walton Toy Company’s various products?

  

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

Product Demand
Next year
(units) Selling
Price
per Unit Direct
Materials Direct
Labor Debbie 50,000 $13.50 $4.30 $3.20 Trish 42,000 $ 5.50 $1.10 $2.00 Sarah 35,000 $21.00 $6.44 $5.60 Mike 40,000 $10.00 $2.00 $4.00 Sewing kit 325,000 $ 8.00 $3.20 $1.60

The following additional information is available:   

The company’s plant has a capacity of 130,000 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.

The direct labor rate of $8 per hour is expected to remain unchanged during the coming year.

Fixed costs total $520,000 per year. Variable overhead costs are $2 per direct labor-hour.

All of the company's nonmanufacturing costs are fixed.

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

  

Required:

1. Determine the contribution margin per direct labor-hour expended on each product. (Do not round interme I need help with steps on how to complete these questions. I have this answer

Debbie 13.00 Trish 7.60 Sarah 10.80 Mike 6.00 Sewing kit 14.00

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.)

Debbie 20,000 Trish 10,500 Sarah 24,500 Mike 20,000 Sewing kit 65,000

3. Based on response to Requirement 1 & 2, how much of 130,000 direct labor hours of capacity will be allocated to Walton Toy Company’s various products?

  

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

Explanation / Answer

Answer:

I have cross erified your answers and comes out to be correct well done.

So I am doing solution for Part 3 and Part 4 right.

In Part 3 we have a resource constraint of direct labour hours since you can see total available labour hours are 130000 Hours but actual needed as calculated by you is 140000 hours (20000+10500+24500+20000+65000) .

So what we will do is we will allocate these 130000 hours in such a way so that we can use it optimally.

For this allocation first me have to rank these products on the basis of the Contribution per labour hour calculated by you. It can be one in following Way

Now it means we will apply labour hour in Sewing machine then in Debbie and so on as per the ranking as follows :

* It means 10000 Hours are only left for Mike and Only 20000 Units of mike can only be produced with the available resources.

Part 4 :

Contribution From above optimum level of units are = (325000*14)+(50000*13)+(35000*10.80)+(42000*7.60)+(20000*6) = 6017200 $

Debbie Trish Sarah Mike Sewing Kit Contribution per Labour Hour 13 7.60 10.80 6 14 Rank II IV III V I

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