Problem $11-25($Algo$)$ Volume Trade$-$Off Declsions $[$LO$11-5,$ LO$11-6]$

The Walton Toy Company manufactures a line of dolls and a sewing klt$.$ 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:

The following additional information is avallable:

a$.$ The company's plant has a capacity of $115,750$ direct labor$-$hours per year on a single$-$shift basls. The company's present employees

and equipment can produce all five products.

b$.$ The direct labor rate of $$8$ per hour is expected to remain unchanged during the coming year.

c$.$ Flxed manufacturing costs total $$555,000$ per year. Varlable overhead costs are $$4$ per direct labor$-$hour.

d$.$ All of the company's nonmanufacturing costs are fixed.

e$.$ The company's finished goods inventory Is negliglble and can be ignored.

Required:

How many direct labor hours are used to manufacture one unit of each of the company's five products?

How much varlable overhead cost is Incurred to manufacture one unlt of each of the company's five products?

What is the contribution margin per direct labor$-$hour for each of the company's five products?

Assuming that direct labor$-$hours is the company's constraining resource, what is the highest total contributlon margin that the

company can earn if it makes optimal use of its constralned resource?

Assuming that the company has made optimal use of its $115,750$ 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$)?$