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Linn Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the dolls is increasing, and management requests assistance from
Linn Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the dolls is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided you with the following data: Linn Toy Company Product Sales The following additional information is available: 1. 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. 2. The direct labor rate of $8 per hour is expected to remain unchanged during the coming year. 3. Fixed costs total $520,000 per year. Variable overhead costs are $2 per direct labor-hour. 4. All of the company's non-manufacturing costs are fixed. 5. The company's finished goods inventory is negligible and can be ignored. Question 1. How would you allocate the 130,000 direct labor hours of capacity to Linn Toy Company's various products? Bonus Question This is worth 10 points; no partial credit 1. What is the highest price, in terms of a rate per hour, that Walton Toy Company would be willing to pay for addition capacity (that is, for added direct labor time)? Note: The correct answer should be typed into the space provided. You must also show your work that illustrates how y arrived at your answer by using the Insert menu option. Then, choose the appropriate option for the media you wish to upload for proof of your work
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