Problem 11-25 Volume Trade-Off Decisions [L011-5, LO11-6] The Walton Toy Company menufactures 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 Bext Selling (unita) per Unit MaterialaLabor 4 , 20 1.44 Debbie 55,000 7.s0 48,000 36.50 ,000 $16.00 338,000 9.30 2.40 Mike Eewing kEt 5.40 3 0.84 4.50 The following additional information is available e. The compeny's plent has a capacity of 94,310 direct labor-hours per year on a single-shift basis. The company's present emplayees and equipment can produce all five products. b. The direct labor rate of $12 per hour is expected to remain unchanged during the coming year c. Fixed menufacturing costs total $650,000 per year. Variable overhead costs are $4 per direct labor-hour. d. All of the company's e. The company's finished goods inventory is negligible and can be ignored. costs are fixed Required: 1. How many direct labor hours are used to manufacture one unit of each of the company's five products? 2. How much varlable overhead cost Iis 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? 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? Complete this question by entering your answers in the tabs below Required 1 Raquired 2Roquired 3 equired 4Required 5 Haw many direct labor hours are used to manufacture one unit of each of the company's five products? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mike Direct labor hours per unit 0.26 0.65 0.46 Required 2> Required 1 Required 2Required 3 Required 4 Required S How much variable averhead cost is incurred to manufacture one unit of each of the company's five products? (Do not round intermediate calculations. Round your answers to 2 decimal places. Mike Variable overhead cost per unit 048 S 0.28 Required 1 Rquired 2 Required 3 Required 4 Required 5 whet is the oontribution margin per direct labor-hour for eech of th callculations. Round your answers to 2 decimal places.) company's five products? (Do not round intermediate Debbie Sarah Sewing Kit Contribution Margin per DLH S 28.00 S 28.50 S 27.25 S 1222S 52.57 Required 4 Required quired 2 Required 3 Required 4 Required 5 suming that direct labor-hours is the company's constre ning resouroe, whet is the highest totel contribution margin the the cormpany can earn if it mekes optimal use of its constra ined resourte? (Do not round interrmediate calculations. Round your final answer ta a whale dollar amount. Required 3 Required 6 Required 1 Requird Required 3 Required4 Required 5 Assuming that the company has made optimal use of its 94,310 direct labor-hours, what is the highest direct labor rate per hour that Walton Toy Company would be willing to pay for additional capecity (that is, for added direct labor time)? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) 24.22
