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(Solution Download) The Walton Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the doll


 

 

 

 

 

 

 

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:

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

Demand Next Year (Units)

 

Selling Price Per UnitDirect MaterialsDirect Labor
Debbie75,000$28.00$5.20$4.80
Trish67,000$5.70$2.10$1.36
Sarah60,000$33.50$10.19$7.20
Mike65,000$18.00$4.50$5.60
Sewing Kit350,000$10.50$5.70$0.96

 

 

 

 

 

 

 

The following additional

 

information is available:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a.

 

The companyA????1s plant has a capacity of 185,290 direct labor-hours

 

per year on a single-shift basis. The companyA????1s 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 companyA????1s finished goods

 

inventory is negligible and can be ignored.

 

QUESTION 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.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ProductContribution Margin per

 

DLH

Debbie
Trish
Sarah
Mike
Sewing Kit

 

QUESTION 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.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ProductTotal Hours
Debbie
Trish
Sarah
Mike
Sewing Kit
Total Hours Required:

 

QUESTION 3:

 

 

 

 

 

 

 

 

Based on response to Requirement 1 & 2, how much of 185,290

 

direct labor hours of capacity will be allocated to Walton Toy

 

CompanyA????1s various products?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ProductHours:
Debbie
Trish
Sarah
Mike
Sewing Kit

 

QUESTION 4:

 

What is the highest total contribution margin that the company

 

can earn if it makes optimal use of its constrained resource?

 

Total Contribution Margin: ____________________

 

QUESTION 5:

 

 

 

 

 

 

 

 

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

 

places.)

 

Highest price ________________ per hour

 

 


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