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:
Demand Next Year (Units)
|Selling Price Per Unit||Direct Materials||Direct Labor|
|The following additional|
information is available:
The companyAc??cs plant has a capacity of 185,290 direct labor-hours
per year on a single-shift basis. The companyAc??cs 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 $635,000 per|
year. Variable overhead costs are $4 per direct labor-hour.
|d.||All of the company's|
nonmanufacturing costs are fixed.
|e.||The companyAc??cs finished goods|
inventory is negligible and can be ignored.
Determine the contribution margin per direct labor-hour expended
on each product.(Do not round intermediate calculations.
Round your answers to 2 decimal places.)
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.)
What is the highest total contribution margin that the company
can earn if it makes optimal use of its constrained resource?
Total Contribution Margin: ____________________
What is the highest price, in terms of a rate per hour, that
Walton Toy Company would be willing to pay for additional capacity
(that is, for added direct labor time)? (Do not round
intermediate calculations. Round your answers to 2 decimal
Highest price ________________ per hour
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