The Walton Toy Company manufactures a line of dolls and a doll dress sewing kit.

Question

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 selling price p. unit direct materials direct labor
Debbie 25,000 $33.00 $2.60 $3.60
Trish 49,000 $24.00 $1.60 $2.40
Sarah 44,000 $25.00 $4.90 $9.00
Mike 50,000 $17.00 $2.90 $5.40
Sewing kit 420,000 $17.00 $1.00 $3.00


The following additional information is available:

a.
The company's plant has a capacity of 164,900 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 $12 per hour is expected to remain unchanged during the coming year.
c. Fixed costs total $436,000 per year. Variable overhead costs are $6 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.

Determine the contribution margin per direct labor-hour expended on each product. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Product Contribution
margin per DLH
Debbie $
Trish $
Sarah $
Mike $
Sewing Kit $


Calculate the total direct labor-hours that will be required to produce the units estimated to be sold during the coming year.

Total hours required


Examine the data you have computed in Requirement (1) and Requirement (2) above. Based on the 164,900 direct labor-hours of capacity production of which product should be reduced and by what quantity? (Round your answer to the nearest whole number.)

The production and sales of the doll should be reduced by dolls


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)? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Highest price $

Explanation / Answer

The same idea of your question http://www.cramster.com/answers-jul-11/accounting/determine-contribution-margin-walton-toy-company-manufactures-line-dolls_1385685.aspx?rec=0

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