The Walton Toy Company economical sales and production mix for the coming year.

Question

The Walton Toy Company economical sales and production mix for the coming year. The company has provided the following data 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 Demand Selling Next year Direct Direct Labor Price per UnitMaterials $5.40 $2.20 $8.09 $3.10 $4.30 Product (units) Debbie Trish Sarah Mike Sewing kit 53,000 46,000 44,400 336,000 $20.00 $6.50 $33.50 $14.00 $9.10 S3.60 $1.44 S6.30 $4.50 S0.99 The following additional information is available: a. The company's plant has a capacity of 113,140 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 costs total $630,000 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 Required 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.) Contribution Margin per DLH Product Debbie Trish Sarah Mike Sewing kit

Explanation / Answer

1 CONTRIBUTION MARGIN PER DIRECT LABOR HOUR A B C D=C/9 E=C*2 F=B+C+E G=A-F H=G/D Product Sales Price Direct Material Direct labor DLH Variable Total Variable Contribution Contribution Per Unit Overhead Cost Margin per DLH Debbie $20 $5.40 $3.60        0.40 $       0.80 $9.80 $10.20 25.5 Trish $6.50 $2.20 $1.44        0.16 $       0.32 $3.96 $2.54 15.875 Sarah $33.50 $8.09 $6.30        0.70 $       1.40 $15.79 $17.71 25.3 Mike $14.00 $3.10 $4.50        0.50 $       1.00 $8.60 $5.40 10.8 Sewing Kit $9.10 $4.30 $0.99        0.11 $       0.22 $5.51 $3.59 32.63636 Contribution Margin Product per DLH Debbie $              25.50 Trish $              15.88 Sarah $              25.30 Mike $              10.80 Sewing Kit $              32.64 2 TOTAL DIRECT LABOR HOURS(DLH) A B C=A*B Product Demand DLH per unit Total DLH Debbie                61,000                        0.40                  24,400 Trish                53,000                        0.16                    8,480 Sarah                46,000                        0.70                  32,200 Mike                44,400                        0.50                  22,200 Sewing Kit              336,000                        0.11                  36,960 Product Total Hours Debbie                24,400 Trish                  8,480 Sarah                32,200 Mike                22,200 Sewing Kit                36,960 3 ALLOCATION OF DIRECT LABOR HOUR Product Contribution per DLH Allocation of DLH Cumulative allocation Sewing Kit $              32.64                   36,960                  36,960 Debbie $              25.50                   24,400                  61,360 Sarah $              25.30                   32,200                  93,560 Trish $              15.88                     8,480               102,040 Mike $              10.80                   11,100               113,140      11,100 Product Hours Debbie                24,400 Trish                  8,480 Sarah                32,200 Mike                11,100 Sewing Kit                36,960 4 HIGHESTCONTRIBUTION MARGIN A B C=A*B Product Hours Contribution Margin per DLH Total Contribution Margin Debbie                24,400 $                 25.50 $     622,200.00 Trish                  8,480 $                 15.88 $     134,620.00 Sarah                32,200 $                 25.30 $     814,660.00 Mike                11,100 $                 10.80 $     119,880.00 Sewing Kit                36,960 $                 32.64 $ 1,206,240.00 SUM $ 2,897,600.00 HIGHET CONTRIBUTION MARGIN $      2,897,600 5 Highest Price willing to pay per DLH $              10.80

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