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:

  

Product	Demand Next year (units)	Selling Price per Unit	Direct Materials	Direct Labor
Debbie	61,000	$20.00	$5.40	$3.60
Trish	53,000	$ 6.50	$2.20	$1.44
Sarah	46,000	$33.50	$8.09	$6.30
Mike	44,400	$14.00	$3.10	$4.50
Sewing kit	336,000	$ 9.10	$4.30	$0.99

The following additional information is available:  

1. The company’s plant has a capacity of 113,140 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.
2. The direct labor rate of $9 per hour is expected to remain unchanged during the coming year.
3. Fixed costs total $630,000 per year. Variable overhead costs are $2 per direct labor-hour.
4. All of the company's nonmanufacturing costs are fixed.
5. 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.

  

Contribution Margin per DLH Product Debbie Trish Sarah Mike Sewing kit 2. Calculate the the total direct labor-hours that will be required to produce the units estimated to be sold during the coming year. (Do not round intermediate calculations.) Product Total Hours Debbie Trish Sarah Mike Sewing Kit Total hours required 3. Based on response to Requirement 1 & 2, how much of 113,140 direct labor hours of capacity will be allocated to Walton Toy Company's various products? Product Debbie Trish Sarah Mike Sewing kit Hours 4. What is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource? Total contribution margin

Answer 1

Dafe ーーーーーーーーーーーーーーーDebbie-Trish-So Mike. Seo.甼kt on llg 200 p.Nataialsb4. 5. yo 9.20 3,09 -3.10 . Ч-30 Variabl-OH一一一08 32一一1.yo 10 0 --0-22--. Canhiksiot100 2.SH 540 .53 Combnibabia/ hrs35.SD 15 oduct Debbie nish Saah Mike 3212CD 22-し2.00 36 960 2,2HO kit-

PicductRankingTotal Howy Debbie Sasia 24,4oo 8,420 32,200 6,960 ISLN0 ucts 6,22,2