The Walton Toy Company (16th Edition) The Walton Toy Company manufactures a line

Question

The Walton Toy Company (16th Edition)

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 Demand Selling Next year Price Direct (units) per Unit Materials Labor $4.05 $ 1.26 $ 6.75 $ 4.95 $ 0.81 Direct Product Debbie Trish Sarah Mike Sewing kit 65,000 $28.00 57,000 6.00 $4.20 $1.10 $8.69 $3.50 $4.70 40,000 $14.00 340,000 $ 9.5e The following additional information is available a. The company's plant has a capacity of 116,330 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 $9 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $535,000 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

Explanation / Answer

Part 1 Product Direct Labour Rate Labour hours used A B A/B D $                  4.05 $                     9.00 0.45 T $                  1.26 $                     9.00 0.14 S $                  6.75 $                     9.00 0.75 M $                  4.95 $                     9.00 0.55 S $                  0.81 $                     9.00 0.09 Part 2 Product Direct Labour Direct Material Variable Overhead Total A B C D = A+b+C D $                  4.05 $                     4.20 0.9 $       9.15 T $                  1.26 $                     1.10 0.28 $       2.64 S $                  6.75 $                     8.69 1.5 $    16.94 M $                  4.95 $                     3.50 1.1 $       9.55 S $                  0.81 $                     4.70 0.18 $       5.69 Part 3 D T Sa M Se Sales $                28.00 $                     6.00 $                        35.00 $    14.00 $       9.00 Var. Cost $                  9.15 $                     2.64 $                        16.94 $       9.55 $       5.69 Contr. $                18.85 $                     3.36 $                        18.06 $       4.45 $       3.31 DL 0.45 0.14 0.75 0.55 0.09 Cont/DL $                41.89 $                   24.00 $                        24.08 $       8.09 $    36.78 Part 4 D $                41.89 65000.00 $         27,22,850.00 Se $                36.78 340000.00 $      1,25,05,200.00 Sa $                24.08 50000.00 $         12,04,000.00 T $                24.00 57000.00 $         13,68,000.00 M $                  8.09 40000.00 $            3,23,600.00 Part 5 Max it will be willing to pay would be $ 9 + $ 8.09 = $ 17.09

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