4 61% . 3 37 AM The Walton Toy Company manufactures a line of dolls and a doll d
ID: 2578336 • Letter: 4
Question
4 61% . 3 37 AM 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 Demand Next yea (units) Selling Direct Labot per Unit $25.00 $ 6.00 $32.50 $16.00 $10.30 Materials $500 $1.90 $9.89 $4.30 $5.50 $3.50 $1.05 $5.60 $4.20 $0.70 Trish Sarah 65,000 58,000 37,000 348,000 Sewing k The following additional information is available: a. The company's plant has a capacity of 138,550 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 $7 per hour is expected to remain unchanged during the coming year. c. Fixed costs total $615,000 per year. Variable overhead costs are $2 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 Required 1. Determine the contribution margin per direct labor-hour expended on each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Margin per Trish Sarah Mike Sewing kit 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 Trish Sarah MikeExplanation / Answer
Answer 1.
Calculation of Contribution Margin per Direct Labor Hour
Debbie Trish Sarah Mike Sewing Kit
SP Per Unit 25.00 6.00 32.50 16.00 10.30
Less: Variable Costs
Direct Materials 5.00 1.90 9.89 4.30 5.50
Direct Labor 3.50 1.05 5.60 4.20 0.70
Variable Overhead 1.00 0.30 1.60 1.20 0.20
Total Variable Costs 9.50 3.25 17.09 9.70 6.40
Contribution per Unit 15.50 2.75 15.41 6.30 3.90
Labour Hrs Req. Per Unit 0.50 0.15 0.80 0.60 0.10
Cont. Per Lab. Hr 31.00 18.33 19.26 10.50 39.00
Rank II IV III V I
Debbie Trish Sarah Mike Sewing Kit
Direct Labor 3.50 1.05 5.60 4.20 0.70
Labour Hrs. required Per Unit (Direct Lab. Cost / $7) 0.50 0.15 0.80 0.60 0.10
Answer 2.
Total direct Labor Hours Required to
Produce Units Estimated
Debbie Trish Sarah Mike Sewing Kit Total
Units Estimated 73,000 65,000 58,000 37,000 348,000
Labour Hrs Req. Per Unit 0.50 0.15 0.80 0.60 0.10
Total lab. Hrs. Required 36,500 9,750 46,400 22,200 34,800 149,650
Answer 3 & 4.
Quantity Unit Contribution Margin Labor Hrs. required per unit Total Labor Hrs Balance of Labor Hrs Total Conbtribution
Total hours available 138,550
Sewing Kit 348,000 3.90 0.10 34,800 103,750 1,357,200
Debbie 73,000 15.50 0.50 36,500 67,250 1,131,500
Sarah 58,000 15.41 0.80 46,400 20,850 893,780
Trish 65,000 2.75 0.15 9,750 11,100 178,750
Mike 18,500 6.30 0.60 11,100 - 116,550
Total Contribution Margin 3,677,780
Answer 5.
Aditional Hrs Required -
Mike - 18,500 Units X 0.60 Hrs 11,100
Additional Contribution
Mike - 18,500 Unist X $6.30 116,550
Labor Cost - Mike 77,700
Total 194,250
Highest price per lab. Hr. 17.50
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