Question
The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the companys products is increasing, and management requests assistance from
The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the companys products 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 | Demand Next year (units) | Selling Price per Unit | Direct Materials | Direct Labor | |||
| Debbie | 68,000 | $ | 31.00 | $ | 4.50 | $ | 4.20 |
| Trish | 60,000 | $ | 5.00 | $ | 1.40 | $ | 0.77 |
| Sarah | 53,000 | $ | 44.50 | $ | 9.14 | $ | 6.30 |
| Mike | 34,000 | $ | 17.00 | $ | 3.80 | $ | 4.90 |
| Sewing kit | 343,000 | $ | 9.80 | $ | 5.00 | $ | 0.42 |
The following additional information is available:
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The companys plant has a capacity of 127,580 direct labor-hours per year on a single-shift basis. The companys present employees and equipment can produce all five products.
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The direct labor rate of $7 per hour is expected to remain unchanged during the coming year.
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Fixed manufacturing costs total $565,000 per year. Variable overhead costs are $5 per direct labor-hour.
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All of the companys nonmanufacturing costs are fixed.
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The companys finished goods inventory is negligible and can be ignored.
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Auditing and Assurance Services An Applied Approach
Authors: Iris Stuart
1st edition
73404004, 978-0073404004
