Question

The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company's products 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: Product Debbie Trish Sarah Mike Sewing kit Demand Next Selling year Price Direct (units) per Unit Materials 70,000 $38.00 $4.70 62,000 $ 4.60 $1.60 55,000 $31.00 $9.44 48,000 $14.00 $4.00 345,000 $10.00 $5.20 Direct Labor $ 3.50 $ 1.00 $ 6.50 $ 4.50 $ 0.50 The following additional information is available: a. The company's plant has a capacity of 94,500 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 $10 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $585,000 per year. Variable overhead costs are $3 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.

Answer 1

Product Debbie Trish Sarah Mike Sewing Kit Direct Demand Selling Price Material 70000 38.00 4.70 62000 4.60 1.60 55000 31.00 9.44 48000 14.00 4.00 345000 10.00 5.20 Direct Labor Hours Available Variable Overhead cost Per Unit Direct Labour Hour Rate Direct Labor 3.50 1.00 6.50 4.50 0.50 94500 10 Clacullations Product Debbie Trish Sarah Mike Sewing Kit Variable Direct Labor Direct Labors Overhead Required Cost 3.50 0.35 1.05 1.00 0.1 0.3 6.50 0.65 1.95 4.50 1.35 0.05 0.15 Contribution Contriution Margin Per Margin DLH 28.8 82.14 1.7 17.00 13.1 20.17 4.2 9.22 4.2 83.00 0.45) 0.5 Variable Overhead Cost Per Unit = Direct Labor * DL Required * Variable OH Rate Contribution Margin = Selling Price- DM - DL - Varaible OH Contribution Margin Per DLH = Contribution Margin / DL Required

Direct Labors Total Hours Total Direct Labor-Hours Required to Prodcued Direct Labour Contribution Product Demand Required Allocated Margin Debbie 70000 0.35 24500 245002012500 Trish 62000 0.1 6200 6200 105400 Sarah 55000 0.65 357501 35750 721050 Mike 48000 0.45 21600 10800 99600 Sewing Kit 345000 0.05 17250 17250 1431750 Total Contribution Margin 4370300 Answers Debbie 0.35 Trish 0.10 Sarah 0.65 Mike 0.45 Sewing Kit 0.05 Direct Labour Hours Per Unit Debbie 1.05 Trish 0.30 Sarah 1.95 Mike 1.35 Sewing Kit 0.15 Variable OH Cost Per Unit Debbie 82.14 Trish 17.00 Sarah 20.17 Mike Sewing Kit 9.22 83.00 Contribution Margin Per DLH Highest Contibution Margin 4370300 19.22 Highest DLH per Hour