Question
Soft Toys Ltd (STL) produces soft dolls. Demand for the dolls is increasing, and management wants you to identify an economical sales and production
Soft Toys Ltd (STL) 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 87,000 Demand (units) Price per unit Variable costs: $ 49.50 Friendly 72,400 $ 42.50 Goody 60,900 $ 39.50 Besty 69,600 $ 25.50 Lovey 123,800 $ 35.50 Direct materials Direct labour 5.40 6.40 4.60 4.00 8.40 11.20 6.40 8.00 4.20 3.20 The following additional information is available: a. The company's plant has a capacity of 130,000 direct labour-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. b. The direct labour rate is $16 per hour; this rate is expected to remain unchanged during the coming year. c. Fixed manufacturing costs amount to $850,000 per year. Variable overhead costs are $7 per direct labour-hour. d. All of the company's 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.) Softy Friendly DLH Per Unit Goody Besty Lovey
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