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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
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:
Problem 7-25 Utilization of a Constrained Resource [LO7-5, LO-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: Demand Selling Direct Direct Next year Price Product per Unit Labor units aterials Debbie 64,000 $22.00 56,000 8.00 $4.10 $3.20 Trish $2.50 $1.04 $38.50 Sarah 49,000 $8.54 $5.60 45,600 Mike $13.00 $3.40 $4.00 339,000 Sewing kit $9.40 $4.60 $0.64 The following additional information is available: a. The company's plant has a capacity of 1 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce b. The direct labor rate of $8 per hour is expected to remain unchanged during the coming year. all five product c. Fixed costs total $525,000 per year. Variable overhead costs are $5 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. Round your answers to 2 decimal placesStep by Step Solution
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