The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand forthe company's products is increasing and management requests assistance from you in determining an economical sales and production mix forthe coming year. The company has provided the following data: Demand Next year Selling Price Dir'ec'l: Direct Product (units) per" Unit Materials Labor" Debbie 73,999 $ 25.99 $ 5.99 $ 3.59 Tr'ish 65,999 $ 6.99 $ 1.99 $ 1.95 Sar'al'l 58,999 $ 32.59 $ 9.89 $ 5.69 Mike 37,999 $ 16.99 $ 4.39 $ 4.29 Sewing ki'l: 348,999 $ 10.39 $ 5.59 $ 9.79 The following additional information is available: a. The company's plant has a capacity of 138,550 direct laborhours per year on a singleshift basis. The company's present employees and equipment can produce all five products. b. The direct labor rate of $7 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $615,000 per year. Variable overhead costs are $2 per direct laborhour. d. All ofthe company's nonmanufacturing costs are fixed. e. The company's finished goods inventory is negligible and can be ignored. Required: 1. How many direct labor hours are used to manufacture one unit of each of the company's five products? 2. How much variable overhead cost is incurred to manufacture one unit of each ofthe company's five products? 3. What is the contribution margin per direct laborhour for each ofthe compa ny's five products? 4. Assuming that direct laborhours is the company's constraining resource, what is the highest total contribution margin that the company can earn if it makes optimal use ofits constrained resource? 5. Assuming that the company has made optimal use of its 138,550 direct laborehours. what is the highest direct labor rate per hour that Walton Toy Company would be willing to pay for additional capacity (that is, for added direct labortime)? Product A B C Selling price $ 186 $ 248 $ 249 Variable expenses: Direct matenials 18 ?2 2? Other variable expenses 126 96 177 Total variable expenses 144 168 294 Contribution margin $ 36 $ 72 $ 36 Contribution mangin ratio 26% 36% 15% The same raw material is used in all three products. Barlow Company has only 5,400 pounds of raw material on hand and will not be able to obtain any more of it for several weeks due to a strike in its suppliers plant. Management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. The material costs $9 per pound. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Assuming that Barlow has unlimited demand for each of its three products, what is the maximum contribution margin the company can earn when using the 5400 pounds of raw material on hand? 3. Assuming that Barlow's estimated customer demand is 600 units per product line. what is the maximum contribution margin the company can earn when using the 5,400 pounds of raw material on hand? 4. A foreign supplier could furnish Barlow with additional stocks of the raw material at a substantial premium over the usual price. Assuming Barlow's estimated customer demand is 600 units per product line and that the company has used its 5,400 pounds of raw material in an optimal fashion. what is the highest price Barlow Company should be willing to pay for an additional pound of materials