Question

Answer 1,2,3,4,5

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: Demand Selling Next Price Direct Materials Labor $5.50 $2.30 $8.24 $3.20 year Product (units) 62,000 54,000 47,000 56,000 $15.00 Direct per Unit $20.50 $ 7.00 $34.00 Debbie Trish $3.60 $1.32 $7.20 $4.80 Sarah Mike Sewing 337,000 $ 9.20 $4.40 $0.72 kit The following additional information is available: company's plant has a capacity of 84,160 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 $12 per hour is expected to remain unchanged during the coming year C. Fixed manufacturing costs total $640,000 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 a. Required: 1. How many direct labor hours are used to manufacture one unit of each of the company's five products? 2. How much variable overhead cost is incurred to manufacture one unit of each of the company's five products? 3. What is the contribution margin per direct labor-hour for each of the company's five products? 4. Assuming that direct labor-hours is the company's constraining resource, what is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource? 5. Assuming that the company has made optimal use of its 84,160 direct labor-hours, what is the highest direct labor rate per hour that Walton Toy Company would be willing to pay for additional capacity (that is, for added direct labor time? Complete this question by entering your answers in the tabs below. Required Required Required Required Required 2 3 How many direct labor hours are used to manufacture one unit of each of the company's five products? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less Sewing Kit Debble Trish Mike Sarah Direct labor hours per unit equired 1 Required 2>

Answer 1

Req 1:
				DEBBIE	TRISH	SARAH	MIKE	SEWING KIT
Labour cost per unit				3.60	1.32	7.20	4.80	0.72
labour rate perr hour				12.00	12.00	12.00	12.00	12.00
labour horus per unit required				0.30	0.11	0.60	0.40	0.06
Req 2
				DEBBIE	TRISH	SARAH	MIKE	SEWING KIT
Labour cost per unit				3.60	1.32	7.20	4.80	0.72
labour rate perr hour				12.00	12.00	12.00	12.00	12.00
labour horus per unit required				0.30	0.11	0.60	0.40	0.06
Variable OH rate per hour				3.00	3.00	3.00	3.00	3.00
variable cost per unit				0.90	0.33	1.80	1.20	0.18
Req 3:
				DEBBIE	TRISH	SARAH	MIKE	SEWING KIT
Selling price				20.50	7.00	34.00	15.00	9.20
Less: variable cost
Material				5.50	2.30	8.24	3.20	4.40
Labour				3.60	1.32	7.20	4.80	0.72
Overheads				0.90	0.33	1.80	1.20	0.18
Contribution margin per unt				10.50	3.05	16.76	5.80	3.90
Divide: Labour hrs				0.30	0.11	0.60	0.40	0.06
Contribution mamrgin per hour				35.00	27.73	27.93	14.50	65.00
Ranking				II	IV	III	V	I
Req 4:
Total Hours available:				84160.00
Less: Distributed in order of ranking
Sewing kit (337000*0.06)				20220
Debbie (62000*0.30)				18600
Sarah (47000*0.60))				28200
Trish (54000*0.11)				5940
Hours available for Mike				11200.00
Contribution earned
		Hrs	Contribution per hour			Contributuon mrgin
Debbie		18600	35			651000
Trish		5940	27.73			164716.2
Sarah		28200	27.93			787626
Mike		11200	14.5			162400
Sewing kit		20220	65			1314300
			Total Contribution			3080042
Req 5:
Additional hourrs will be used for production of Mike only.
Therfore, the company is ready to pay only additional ccontribution margin per our of mike.
Maximum prie per hour to be paid:
Exiting rate				12
Add: Contribution margin per hour of Mike				14.5
Maximum price per hour to be paid:				26.5