Problem 13-27 (Algo) Volume Trade-Off Decisions [LO13-5, LO13-6] The Walton Toy Company manufactures four dolls and a sewing kit. It provided the following data for next year: The following additional information is avalloble: a. The companys plant has a capacity or 80,520 direct labor-thours per year on a single-shift basts. Each employee and plece of equipment are capable of making all five products. b. Next year's direct labor pay rate will be $5 per hous c. Fixed manufacturing costs total $590,000 per year. Variable overheod costs are $2 per direct labor-hour: he following additional information is available: a. The company's plant has a capacity of 80,520 direct labor-hours per year on a single-shift basis. Each employee and plece of equipment are capable of making all flve products. b. Next year's direct labor pay rate will be $5 per hour. c. Fixed manufacturing costs total $590,000 per year, Varlable overhead costs are $2 per direct iabor-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 mary direct labor hours are used to manufacture one unit of each of the compary's five products? 2. How much variable overhesd cost is incurfed to manufacture one unit of eoch of the compony's flve prodincts? 3. What is the contribution margin per direct labor hout for each of the company's five products? quired: How many direct labor-hours are used to manufacture one unit of each of the company's flve products? 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 direct labor-hours is the company's constraining resource, what is the highest total contribution margin the cc earn next year if it makes optimal use of its constrained resource? 5. Assuming next year the company makes optimal use of its 80,520 direct labor-hours, what is the highest direct labor rat Walton Toy Company should be willing to pay for additional capacity (that is, for added direct labor time)? Complete this question by entering your answers in the tabs below. How many direct labor-hours are used to manufacture one unit of each of the company's five products? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. ow many direct labor-hours are used to manufacture one unit of each of the company's five product ote: Do not round intermediate calculations. Round your answers to 2 decimal places. ow much variable overhead cost is incurred to manufacture one unit of each of the company's five products lote: Do not round intermediate calculations, Round your answers to 2 decimal places. That is the contribution margin per direct labor-hour for each of the company's five products? ote: Do not round intermediate calculations. Round your answers to 2 decimal places. What is the contribution margin per direct labor-hour for each of the company's five products? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Assuming direct labor-hours is the company's constraining resource, what is the highest total contribution margin the company can earn next year if it makes optimal use of its constrained resource? Note: Do not round intermediate calculations. Round your final answer to a whole dollar amount. Assuming next year the company makes optimal use of its 80,520 direct labor-hours, what is the highest direct labor rate per hour Walton Toy Company should be willing to pay for additional capacity (that is, for added direct labor time)? Note: Do not round intermediate calculations. Round your answers to 2 decimal places
