Problem 7-25 Utilization of a Constrained Resource (LO7-5, LO7-6) The Walton 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 the following data: Product Debbie Trish Sarah Mike Sewing kit Demand Next year (units) 71,000 63,000 56.000 47,600 346,000 Selling Price per Unit $17.50 $ 6.00 $31.50 $13.00 $ 10.10 Direct Materials $4.80 $1.70 $9.59 $4.10 $5.30 Direct Labor $3.20 $1.60 $5.60 $4.00 $1.20 The following additional information is available: a. The company's plantas a capacity of 144,000 direct labor-hours per year on a single-shift basis. 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. Fixed costs total $595,000 per year. Variable overhead costs are $3 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. Determine the contribution margin per direct labor-hour expended on each product. (Do not round intermediate calculations. Required: 1. Determine the contribution margin per direct labor-hour expended on each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Product Contribution Margin per DLH Debbie Trish Sarah Mike Sewing kit 2. Calculate the the total direct labor-hours that will be required to produce the units estimated to be sold during the coming year. (Do not round intermediate calculations.) Product Debbie Trish Sarah Mike Total Hours 28,400 12,600 39,200 23.800 3. Based on response to Requirement 1&2, how much of 144,000 direct labor hours of capacity will be allocated to Walton Toy Company's various products? Product Debbie Trish Sarah Mike Sewing kit Hours 28.400 12,600 39,200 23,800 $ 51,900 4. What is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource? Total contribution margin 5. What is the highest price, in terms of a rate per hour, that Walton Toy Company would be willing to pay for additional capacity (that is, for added direct labor time)? (Do not round intermediate calculations. Round your answers to 2 decimal places.)