The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the...
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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 Debbie Trish Sarah Mike Sewing kit Demand Next Selling Price year (units) per Unit $ 17.00 $ 6.50 $26.00 52,000 44,000 37,000 40,800 327,000 $ 12.00 $ 8.20 The following additional information is available: Direct Materials $ 4.50 $ 1.30 $6.74 $ 2.20 $ 3.40 Direct Labor $ 2.80 $ 1.40 $4.90 $ 3.50 $ 1.05 The company's plant has a capacity of 114,750 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. The direct labor rate of $7 per hour is expected to remain unchanged during the coming year. Fixed manufacturing costs total $540,000 per year. Variable overhead costs are $4 per direct labor-hour. Wf of the company's nonmanufacturing costs are fixed. company's finished goods inventory is negligible and can be ignored. uired: ow 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? 5. Assuming that the company has made optimal use of its 114,750 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)? 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 Debbie Trish Sarah Mike Sewing kit Demand Next Selling Price year (units) per Unit $ 17.00 $ 6.50 $26.00 52,000 44,000 37,000 40,800 327,000 $ 12.00 $ 8.20 The following additional information is available: Direct Materials $ 4.50 $ 1.30 $6.74 $ 2.20 $ 3.40 Direct Labor $ 2.80 $ 1.40 $4.90 $ 3.50 $ 1.05 The company's plant has a capacity of 114,750 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. The direct labor rate of $7 per hour is expected to remain unchanged during the coming year. Fixed manufacturing costs total $540,000 per year. Variable overhead costs are $4 per direct labor-hour. Wf of the company's nonmanufacturing costs are fixed. company's finished goods inventory is negligible and can be ignored. uired: ow 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? 5. Assuming that the company has made optimal use of its 114,750 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)?
Expert Answer:
Answer rating: 100% (QA)
To solve these problems we first need to calculate some key values for each of the five products Lets go step by step Direct Labor Hours per Unit To find the direct labor hours per unit for each produ... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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