Question

The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company's products is increasing. ement 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 Selling Next year Price (units) per Unit 69, eee $ 41.00 61,00 $ 4.50 54, eee $38.50 46,800 $15.00 344,200 $ 9.90 Direct Materials $4.60 $1.50 59.29 $9.29 $3.90 $5.10 Direct Labor $ 4.00 $ 1.00 $7.00 $ 5.00 S 0.50 The following additional Information is available: a. The company's plant has a capacity of 100,400 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 $575,000 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.

Answer 1

1)
				Debbie	Trish	Sarah	Mike	Sewing kit
direct labor cost per unit				4	1	7	5	0.5
direct labor rate per hour				10	10	10	10	10
direct labor hrs per unit				0.4	0.1	0.7	0.5	0.05
2)	variable overhead cost incurred
				Debbie	Trish	Sarah	Mike	Sewing kit
variable overhead cost per hour				2	2	2	2	2
direct labor hours per unit				0.4	0.1	0.7	0.5	0.05
variabe overhead cost incurred				0.8	0.2	1.4	1	0.1
3)	total contribution margin
Selling price				41	4.5	30.5	15	9.9
less:Variable costs
direct materials				4.6	1.5	9.29	3.9	5.1
direct labor				4	1	7	5	0.5
variable overhead				0.8	0.2	1.4	1	0.1
total variable costs				9.4	2.7	17.69	9.9	5.7
contribution margin per unit				31.6	1.8	12.81	5.1	4.2
direct labor hours per unit				0.4	0.1	0.7	0.5	0.05
contribution margin per hours				79.00	18.00	18.30	10.20	84.00	answer
Ranking				2	4	3	5	1

4)			DLH per	estimated	total
	product		unit	sale units	hours
	Debbie		0.4	69,000	27600
	trish		0.1	61,000	6100
	Sarah		0.7	54,000	37800
	mike		0.5	23,400	11,700
	sewing kit		0.05	344,000	17200
	total hours required				100,400
					Allocated	units	contribut	total
					total	produced	per unit	contribution
	product				hours
	Debbie				27,600	69,000	31.6	2180400
	trish				6,100	61,000	1.8	109800
	Sarah				37,800	54,000	12.81	691740
	mike				11,700	23,400	5.1	119340
	sewing kit				17,200	344,000	4.2	1444800
	total hours required				100,400			4546080	answer
5)
	highest price will be		$10direct labor rate +$10.2contribution margin per hours
			20.2	answer