Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

6 The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company's products is increasing, and management requests

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

6 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: 10 points Product Debbie Demand Next Selling Price year (units) 68,000 per Unit Direct Materials Direct Labor $ 31.00 $ 4.50 $ 4.20 Trish 60,000 $ 5.00 $ 1.40 $ 0.77 Sarah 53,000 $ 44.50 $ 9.14 $ 6.30 eBook Mike Sewing kit 34,000 343,000 $ 17.00 $ 3.80 $ 4.90 $ 9.80 $ 5.00 $ 0.42 Print References The following additional information is available: a. The company's plant has a capacity of 127,580 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 $7 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $565,000 per year. Variable overhead costs are $5 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. 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 127,580 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)? Check my work

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Core Concepts of Accounting

Authors: Cecily A. Raiborn

2nd edition

470499478, 978-0470499474

More Books

Students also viewed these Accounting questions

Question

9. Prove Theorem 11.2.2.

Answered: 1 week ago

Question

Explain all drawbacks of application procedure.

Answered: 1 week ago