Question

the montrose toy company manufactures a line of dolls and a doll dress sewing kit

The Montrose 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 the best sales and production mix for the coming year. The company has provided the following data: Product Marcy Tina Demand Next year (units) 25,900 41,900 39,900 45,900 459,000 Selling Price per Unit $33.00 $26.00 $23.00 $20.00 $19.00 Direct Materials $3.30 $2.50 $4.70 $3.30 $2.00 Direct Labor $4.60 $3.50 $8.90 $6.80 $3.10 Cari Lenny Sewing kit $3.10 The following additional information is available: a. The company's plant has a capacity of 157,600 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 $ 14 per hour is expected to remain unchanged during the coming year. c. Fixed costs total $355,000 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. Required: 1. Determine the contribution margin per direct labor-hour expended on each product. (Round your final answers to 2 decimal places.) Product Contribution Margin per DLH Marcy Tina Cari Lenny Sewing Kit

Answer 1

Answer:

Requirements-1

Description	Marcy	Tina	Carl	Lenny	Sewing kit
Direct labor cost per unit	4.60	3.50	8.90	6.80	3.10
Direct labor hour per unit (a) divided by 14	0.329	0.25	0.636	0.486	0.221
Selling price	33.00	26.00	23.00	20.00	19.00
Variable cost:
Direct material	3.30	2.50	4.70	3.30	2.00
Direct labor	4.60	3.50	8.90	6.80	3.10
Variable overhead multiply by 3 to direct labor hour per unit	0.987	0.75	1.908	1.458	0.663
Total variable cost	8.887	6.75	15.508	11.558	5.763
Contribution margin (b) (selling price- t.v.c)	24.113	19.25	7.492	8.442	13.237
Contribution margin per DLH (b)/(a)	73.29	77	11.78	17.37	59.90

Requirements-2

product	DLH per unit	Estimate sales unit	Total DLHs
Marcy	0.329	25900	8521.1
Tina	0.25	41900	10475
Carri	0.636	39900	25376.4
Lenny	0.486	45900	22307.4
Sewing kit	0.221	459000	101439
Total DLHs required			168118.9

Requirements-3

The additional capacity of used to Carl doll of the company should be willing to be pay up 25.78 per DLH (14 usual labor rate plus 11.78 contribution margin per DLH ) for added labor Time.

As per the company could employ work for overtime at usual time and half an hour of rate 21 per hour ( 14 additional hour *1.5 usual rate) so still improve over all profit