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 Demand Selling Next year Price Direct Direct (units) per Unit Materials Labor $2.80 $1.20 $5.20 $3.60 $0.80 Product Debbie Trish Sarah Mike Sewing kit 60,000 $19.50 $5.30 52,000 6.00 $2.10 45,000 $33.00 $7.94 52,000 $13.00 $3.00 335,000 $ 9.00 $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 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 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.) Contribution Margin per DLH Product Debbie Trish Sarah Mike Sewing kit

Explanation / Answer

3)

**11700= 103250-33500-21000-29250-7800

4)

1) Product Selling price per unit Direct material cost per unit Direct labour cost per unit Labour hours required per unit Variable Overhead per unit Contribution margin per unit Contribution margin per hour a b c d=c/$8 e=d*$5 f= a-b-c-e g=f/d D $    19.50 $              5.30 $       2.80 0.35 $          1.75 $              9.65 $             27.57 T $       6.00 $              2.10 $       1.20 0.15 $          0.75 $              1.95 $             13.00 S $    33.00 $              7.94 $       5.20 0.65 $          3.25 $            16.61 $             25.55 M $    13.00 $              3.00 $       3.60 0.45 $          2.25 $              4.15 $               9.22 S KIT $       9.00 $              4.20 $       0.80 0.1 $          0.50 $              3.50 $             35.00 2) Product Direct labour cost per unit Labour hours required per unit Demand Estimated labour hours a as per (1) =b c d=c*b D $       2.80 0.35 60000 21000 T $       1.20 0.15 52000 7800 S $       5.20 0.65 45000 29250 M $       3.60 0.45 52000 23400 S KIT $       0.80 0.1 335000 33500 Total req labour hrs 114950

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