The Montrose Toy Company manufactures a line of dolls and a doll dress sewing ki

Question

The Montrose 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 the best sales and production mix for the coming year. The company has provided the following data:

The company’s plant has a capacity of 154,800 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.

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 final answers to 2 decimal places.)

Calculate 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 price, in terms of a rate per hour, that Montrose Toy Company should be willing to pay for additional capacity (that is, for added direct labor time)? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Highest Price:_______ Per hour

The Montrose 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 the best sales and production mix for the coming year. The company has provided the following data:

Explanation / Answer

Product

Product

Product

a b c d e f g h i j

Product

Demand Selling Direct Direct DLH Rate/Hr DLH Hr/Unit Variable OH cost /unit @$3/DLH Total Variable cost/Unit Contribution/Unit=b-h Contibution Margin /DLH=i/f Total DLH required for demand of the year=a*f Next year Price Materials Labor (units) per Unit   Marcy                            25,200         45.00           4.50           6.30         22.00           0.29                        0.86         11.66              33.34 116.43                        7,216.36   Tina                            41,200         37.00           3.60           5.20         22.00           0.24                        0.71           9.51              27.49 116.31                        9,738.18   Cari                            39,200         34.00           6.90         13.30         22.00           0.60                        1.81         22.01              11.99 19.83                      23,698.18   Lenny                            45,200         32.00           5.10         11.00         22.00           0.50                        1.50         17.60              14.40 28.80                      22,600.00   Sewing kit                          452,000         31.00           3.20           4.90         22.00           0.22                        0.67           8.77              22.23 99.82                   100,672.73 1 Contribution Margin/DLH

Product

Contibution Margin /DLH   Marcy                            116.43   Tina                            116.31   Cari                              19.83   Lenny                              28.80   Sewing kit                              99.82 2 TOTAL DLH required

Product

Total DLH required for demand of the year=a*f   Marcy                        7,216.36   Tina                        9,738.18   Cari                      23,698.18   Lenny                      22,600.00   Sewing kit                    100,672.73 TOTAL DLH required                    163,925.45 3 The minimum contribution is from Cari =$11.99/unit At Labor rate 42.15/Hr , the contribution from Cari=0. Therefore maximum rate that can be given for additional labor is =$42.15/DLH.

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