Question
The Brandilyn Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the dolls is increasing, and management requests assistance
| The Brandilyn 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 the best sales and production mix for the coming year. The company has provided the following data: |
| Product | Demand Next year (units) | Selling Price per Unit | Direct Materials | Direct Labor |
| Marcy | 26,000 | $ 36.00 | $ 3.00 | $ 4.80 |
| Tina | 36,000 | $ 27.00 | $ 1.90 | $ 2.40 |
| Cari | 36,000 | $ 26.00 | $ 3.80 | $ 9.60 |
| Lenny | 47,000 | $ 16.00 | $ 2.20 | $ 6.00 |
| Sewing kit | 550,000 | $ 14.00 | $ 1.20 | $ 2.40 |
| The following additional information is available: |
| a. | The companys plant has a capacity of 167,300 direct labor-hours per year on a single-shift basis. The companys present employees and equipment can produce all five products. |
| b. | The direct labor rate of $12.00 per hour is expected to remain unchanged during the coming year. |
| c. | Fixed costs total $336,000 per year. Variable overhead costs are $3.00 per direct labor-hour. |
| d. | All of the companys nonmanufacturing costs are fixed. |
| e. | The companys 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. Round your answers to 2 decimal places.) |
| Product | Contribution Margin per DLH |
| Marcy | $ |
| Tina | $ |
| Cari | $ |
| Lenny | $ |
| Sewing Kit | $ |
| 2. | Calculate 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 | Total DLHs | ||||||||||
| Marcy | |||||||||||
| Tina | |||||||||||
| Cari | |||||||||||
| Lenny | |||||||||||
| Sewing Kit | |||||||||||
| Total DLHs required | |||||||||||
| 3. Determine how much of the current plant capacity brandilyn toy company should allocate to each product
| |||||||||||
| 4. | What is the highest price, in terms of a rate per hour, that Brandilyn Toy Company should be willing to pay for additional capacity (that is, for added direct labor time)? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Highest price | $ per hour |
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Intermediate Accounting Volume 1
Authors: Kin Lo, George Fisher
4th Edition
013523610X, 9780135236109
