Famous Face Dolls Company manufactures and sells custom dolls through a network of specialty stores. The face of each doll is hand-painted by a highly skilled craftsperson in the image of a popular public figure. Large dolls (75-80 cm) sell for $200 each and have a unit variable cost of $90. Each large doll requires 30 minutes of painting time. Small dolls (40-45 cm) sell for $100 and have a unit variable cost of $65.00. Each small doll requires 15 minutes of painting time. Typical demand is 150 large dolls and 500 small dolls per month. Due to upcoming vacations, the amount of available face-painting time is limited to 180 hours for the next month.

The contribution margin per hour of painting time is:

Question 9Answer

a.

$220/hour for large dolls and $140/hour for small dolls

b.

$1.67/hour for large dolls and $7.69/hour for small dolls

c.

$290/hour for large dolls and $165/hour for small dolls

d.

$110/hour for large dolls and $35/hour for small doll