The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company$$s 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 $50,000-$ $$16\mathrm{.}70-$ $$4\mathrm{.}30-$ $$6\mathrm{.}40$

Trish $42,000-$ $$7\mathrm{.}50-$ $$1\mathrm{.}110-$ $$4\mathrm{.}00$

Sarah $35,000$ $$26\mathrm{.}60-$ $$6\mathrm{.}44-$ $$11\mathrm{.}20$

Mike $40,000-$ $$14\mathrm{.}00-$ $$2\mathrm{.}00-$ $$8\mathrm{.}00$

Sewing $325,000$ $$9\mathrm{.}60$ $$3\mathrm{.}20$ $$3\mathrm{.}20$

The following additional information is available:

a$.$The company$$s plant has a capacity of $130,000$ direct labor$-$hours per year on a single$-$shift basis. The company$$s present employees and equipment can produce all five products.

b$.$The direct labor rate of $$16$ per hour is expected to remain unchanged during the coming year.

c$.$Fixed manufacturing costs total $$520,000$ per year. Variable overhead costs are $$2$ 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:

$1.$ 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 of the company$$s five products?

$3.$ What is the contribution margin per direct labor$-$hour for each of the company$$s five products?

$4.$ Assuming that direct labor$-$hours is the company$$s constraining resource, what is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource? $($Do not round intermediate calculations$)$

$5.$ Assuming that the company has made optimal use of its $130,000$ direct labor$-$hours, 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 labor time$)?$

Answer rating: 100% (QA)

1 Direct labor hours required to manufacture one unit of each product Debbie 640 16 0394 hours Trish ... View the full answer