value: 2.00 points Problem 12-25 Utilization of a Constrained Resource [LO12-5,
ID: 2469234 • Letter: V
Question
value:
2.00 points
Problem 12-25 Utilization of a Constrained Resource [LO12-5, LO12-6]
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:
The company’s plant has a capacity of 94,500 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.
Determine the contribution margin per direct labor-hour expended on each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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.)
Based on response to Requirement 1 & 2, how much of 94,500 direct labor hours of capacity will be allocated to Walton Toy Company’s various products?
What is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource?
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.)
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:
Explanation / Answer
1)
Working notes:
2)
3)
4)
Number of units produced and sold for MIKE = 10800 hours / 0.45 = 24000 units
5)
The loss of contribution from short selling of MIke = (48000 - 24000) units x $5.34/unit = $128400
Contribution per hour for Mike = $11.89
so the price that could be paid for the additional hours = $11.89 +$10 = $21.89 per hour
Product Debbie Trish sara Mike Sewing Kit Selling price per unit $ 38.00 $ 4.60 $ 31.00 $ 14.00 $ 10.00 less: variable cost per unit Direct material $ 4.70 $ 1.60 $ 9.44 $ 4.00 $ 5.20 Direct labour $ 3.50 $ 1.00 $ 6.50 $ 4.50 $ 0.50 Variable cost $ 1.05 $ 0.30 $ 1.95 $ 0.15 $ 9.25 $ 2.90 $ 17.89 $ 8.65 $ 5.70 Contribution per unit $ 28.75 $ 1.70 $ 13.11 $ 5.35 $ 4.30 Labour hours per unit 0.35 0.1 0.065 0.45 0.05 Contribution per hour $ 82.14 $ 17.00 $ 201.69 $ 11.89 $ 86.00Related Questions
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