Theory of constraints, contribution margin, sensitivity analysis. Talking Toys (TT)...

Theory of constraints, contribution margin, sensitivity analysis. Talking Toys (TT) produces dolls in two processes: molding and assembly. TT is currently producing two models: Chatty Chelsey and Talking Tanya. Production in the molding department is limited by the amount of materials available. Production in the assembly department is limited by the amount of trained labor available. The only variable costs are materials in the molding department and labor in the assembly department. Following are the requirements and limitations by doll model and department:

The following requirements refer only to the preceding data. There is no connection between the requirements.

1. If there were enough demand for either doll, which doll would TT produce? How many of these dolls would it make and sell?

2. If TT sells three Chatty Chelseys for each Talking Tanya, how many dolls of each type would it produce and sell? What would be the total contribution margin?

3. If TT sells three Chatty Chelseys for each Talking Tanya, how much would production and contribution margin increase if the molding department could buy 900 more pounds of materials for $8 per pound?

4. If TT sells three Chatty Chelseys for each Talking Tanya, how much would production and contribution margin increase if the assembly department could get 65 more labor hours at $12 per hour?