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: Next year Prioe Direct Direct Debbie Trish Sarah Mike Sewing kit 54,000 47,000 56,000 337,000 $20.50 $7.00 $34.00 $15.00 $9.20 $5.50 $2.30 $8.24 $3.20 $4.40 $3.60 $1.32 $7.20 $4.80 S0.72 The following additional information is available: a. The company's plant has a capacity of 84,160 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce all five b. The direct labor rate of $12 per hour is expected to remain unchanged during the coming year. c. Fixed costs total $640,000 per year. Variable overhead costs are $3 per direct labor-hour d. 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 Intermediate calculations. Round your answers to 2 decimal places.J Product Margin per Debbie Trish Sarah Mike Sewing kt

Explanation / Answer

1) Calculate contribution margin per direct labour hour :

Debble Trish Sarah Mike Sewing kit Selling price per unit 20.50 7 34 15 9.20 Material per unit 5.50 2.30 8.24 3.20 4.40 Labour per unit 3.60 1.32 7.20 4.80 0.72 Contribution margin per unit 11.40 3.38 18.56 7 4.08 Labour hour per unit 0.30 0.11 0.60 0.40 0.06 Contribution margin per labour hour 38 30.73 30.93 17.5 68

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