Question
Soft and Cuddly Friends (SCF) produces soft dolls. Demand for the dolls is increasing, and management wants you to identify an economical sales and production
Soft and Cuddly Friends (SCF) produces soft dolls. Demand for the dolls is increasing, and management wants you to identify an economical sales and production mix for the coming year. The following information is available: Softy Friendly Goody Besty Lovey Demand (units) 79,000 66,000 55,300 63,200 112,600 Price per unit $ 36.00 $ 27.00 $ 25.00 $ 18.00 $ 21.00 Variable costs: Direct materials 3.60 2.60 5.10 3.80 2.30 Direct labour 5.60 3.50 9.80 7.00 2.80 The following additional information is available: The companys plant has a capacity of 120,000 direct labour-hours per year on a single-shift basis. The companys present employees and equipment can produce all five products. The direct labour rate is $14 per hour; this rate is expected to remain unchanged during the coming year. Fixed manufacturing costs amount to $770,000 per year. Variable overhead costs are $5 per direct labour-hour. All of the companys sales and administrative costs are fixed. Required: 1. How many total direct labour-hours will be required to produce the units estimated to be sold during the coming year? Show your computations. (Round your answers to 2 decimal places.)
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