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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:
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: Selling Price per Unit Product Debbie Trish Sarah Mike Sewing kit Demand Next year (units) 64,000 56,000 49,000 45,600 339,000 $22.00 $ 8.00 $38.50 $13.00 $ 9.40 Direct Materials $4.10 $2.50 $8.54 $3.40 $4.60 Direct Labor $3.20 $1.04 $5.60 $4.00 $0.64 The following additional information is available: a. The company's plant has a capacity of 105,700 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. b. The direct labor rate of $8 per hour is expected to remain unchanged during the coming year. 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 places.) Product Contribution Margin per DLH Debbie Trish Sarah Mike Sewing kit 2. Calculate the 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 Debbie Trish Sarah Mike Sewing Kit Total hours required Total Hours 52,480 28,000 83,692 31,008 311,880 507,060 3. Based on response to Requirement 1 & 2, how much of 105,700 direct labor hours of capacity will be allocated to Walton Toy Company's various products? Hours Product Debbie Trish Sarah Mike Sewing kitStep by Step Solution
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