Problem 6-25 (Algo) Volume Trade-Off Decisions [LO6-5, L06-6) The Walton Toy Company manufactures 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 mbx for the coming year. The company has provided the following data: Demand Selling Price Next Direct Direct year (units) 57,000 $23.00 49,000 $7.00 42,e00 $41.00 45,500 $10.00 332,000 8.70 per Unit Materials Labor Product $1.50 $0.60 $3.00 $2.00 $0.35 $5.00 $1.80 Debbie Trish $7.49 $2.70 $3.90 Sarah Mike Sewing kit The following additional Information is available: a. The company's plant has a capacity of 80,520 direct labor-hours per year ona single-shift basis. The company's present employees and equipment can produce all five products. b. The direct labor rate of $5 per hour is expected to remain unchanged during the coming year c. Fixed manufacturing costs total $590,000 per year. Variable overhead costs are $2 per direct labor-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 many direct labor hours are used to manufacture one unit of each of the company's five products? 2. How much varlable 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 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 constralned resource? 5. Assuming that the company has made optimal use of its 80,520 direct labor-hours, what is the highest direct labor rate per hour that Walton Toy Company would be wlling to pay for additional capacity (that Is, for added direct labor time)? Complete this question by entering your answers in the tabs below. Required 5 Required 4 Required 2 Required 3 Required 1 How 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.) Sewing Kit Sarah Mike Trish Debbie Direct labor hours per unit Required 2 Required1 re taus Derow. Complete his question by entering your answers Ruired 2 Required 5 Required 3 Required 4 Required 1 How much variable overhead cost is incurred to manufacture one unit of each of the company's five products? (Do not ro intermediate calculations. Round your answers to 2 decimal places.) Sewing Kit Debbie Trish Sarah Mike Variable overhead cost per unit Required 3 Required 1 Complete this question by entering your answers in the tabs below. Requed 3 Required 1 Required 2 Required 4 Required 5 What is the contribution margin per direct labor-hour for each of the company's five products? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Debbie Trish Sarah Mike Sewing Kit Contribution Margin per DLH
