Demand for Stuffin’ Such stuffed animal shells and stuffing/finishing kits manuf
ID: 2584364 • Letter: D
Question
Demand for Stuffin’ Such stuffed animal shells and stuffing/finishing kits manufactured by RoseMarie Limited is increasing, and management requests assistance from you in determining the best sales and production mix for the coming year. The company has provided the following data:
The company’s plant has a capacity of 12,250 direct labour-hours per year on a single-shift basis. The company’s current employees and equipment can produce all five products.
Determine the contribution margin per direct labour-hour expended on each product (the profitability index). (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Prepare a schedule showing the total direct labour-hours that will be required to produce the units estimated to be sold during the coming year.
What is the highest price, in terms of a rate per hour, that Stuffin’ Such should be willing to pay for additional capacity (that is, for added direct labour time)? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Demand for Stuffin’ Such stuffed animal shells and stuffing/finishing kits manufactured by RoseMarie Limited is increasing, and management requests assistance from you in determining the best sales and production mix for the coming year. The company has provided the following data:
Explanation / Answer
50.17(highest price)
1) Teddy polar Husky tiger stuffing direct labor cost per unit 1.5 2 4 6 1 direct labor hours per unit $10 labor rate 0.15 0.2 0.4 0.6 0.1 Hrs Hrs Hrs Hrs Hrs Selling price 40 42 35 37 22 less:Variable costs direct materials 6.5 5.3 4.5 5.1 3.5 direct labor 1.5 2 4 6 1 variable overhead (3*DLHs) 0.45 0.6 1.2 1.8 0.3 total variable costs 8.45 7.9 9.7 12.9 4.8 contribution margin per unit 31.55 34.1 25.3 24.1 17.2 contribution margin per DLH's 210.33 170.50 63.25 40.17 172.00 answer 2) DLH per estimated total product unit sale units hours teddy 0.15 11,000 1650 pola 0.2 9,000 1800 husky 0.4 10,000 4000 tiger 0.6 7,000 4200 stuffing 0.1 18,000 1800 total hours required 13450 4) $10 direct labor rate +$40.17 contribution margin per hours50.17(highest price)
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