Apply the key six concepts of differencial analysis in managerial decisions, making it to coincide with this question. 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

Next Selling

Year Price per Direct Direct

Product $($units$)$ Unit Materials Labor

Debbie $50,000$ $$16\mathrm{.}70$ $$4\mathrm{.}30$ $$6\mathrm{.}40$

Trish $42,000$ $$7\mathrm{.}50$ $$1\mathrm{.}10$ $$4\mathrm{.}00$

Sarah $35,000$ $$26\mathrm{.}60$ $$6\mathrm{.}44$ $$11\mathrm{.}20$

Mike $40,000$ $$14\mathrm{.}00$ $$2\mathrm{.}00$ $$8\mathrm{.}00$

Sewing kit $325,000$ $$9\mathrm{.}60$ $$3\mathrm{.}20$ $$3\mathrm{.}20$

The following additional information is available:

a$.$ The company's plant has a capacity of $130,000$ 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 $$16$ per hour is expected to remain unchanged during the coming year.

c$.$ Fixed manufacturing costs total $$520,000$ per year. Variable overhead costs are $$2$ 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 optim The project is to integrate what you have learned to apply it in managerial decision making to coincide

with the methods in the Key Six Concepts of Differential Analysis.

Key Concept #$1-$ A$)$ Product: Make$/$Buy or B$)$ Drop$/$Keep

Key Concept #$2-$ Costs & Benefits: Relevant or Irrelevant Costs

Key Concept #$3-$ Differential Analysis: A$)$ Future Costs and Benefits between two alternatives $-$

Differential Costs & Differential Revenue or B$)$ Incremental Cost & Avoidable Cost

Key Concept #$4-$ Sunk Costs

Key Concept # $5-$ Future costs & benefits that do not differ between alternatives

Key Concept # $6-$ Opportunity Costsal use of its constrained resource?

$5.$ Assuming that the company has made optimal use of its $130,000$ 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$)?$