The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for

Question

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 Next Selling Price Direct Direct (units) per Unit MaterialsLabor $ 4.20 $ 1.44 $7.80 $ 5.40 $ 0.84 year Product Debbie Trish Sarah Mike Sewing kit 63,000 $21.00 55,000 $ 7.50 48,000 $36.50 48,000 $16.00 338,000 $ 9.30 $5.60 $2.40 $8.39 $3.30 $4.50 The following additional information is available a. The company's plant has a capacity of 94,310 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 manufacturing costs total $650,000 per year. Variable overhead costs are $4 per direct labor-hour d. All of the company's nonmanufacturing costs are tixed e. The company's finished goods inventory is negligible and can be ignored

Explanation / Answer

1) Debbie Trish Sarah Mike Sewing kit direct labor cost per unit 4.2 1.44 7.8 5.4 0.84 direct labor rate per hour 12 12 12 12 12 direct labor hrs per unit 0.35 0.12 0.65 0.45 0.07 2) variable overhead cost incurred Debbie Trish Sarah Mike Sewing kit variable overhead cost per hour 4 4 4 4 4 direct labor hours per unit 0.35 0.12 0.65 0.45 0.07 variabe overhead cost incurred 1.4 0.48 2.6 1.8 0.28 3) total contribution margin Selling price 21 7.5 36.5 16 9.3 less:Variable costs direct materials 5.6 2.4 8.39 3.3 4.5 direct labor 4.2 1.44 7.8 5.4 0.84 variable overhead 1.4 0.48 2.6 1.8 0.28 total variable costs 11.2 4.32 18.79 10.5 5.62 contribution margin per unit 9.8 3.18 17.71 5.5 3.68 direct labor hours per unit 0.35 0.12 0.65 0.45 0.07 contribution margin per hours 28.00 26.50 27.25 12.22 52.57 answer 4) DLH per estimated total product unit sale units hours Debbie 0.35 63,000 22050 trish 0.12 55,000 6600 Sarah 0.65 48,000 31200 mike 0.45 48,000 21600 sewing kit 0.07 338,000 23660 total hours required 105110 Allocated units contribut total total produced per unit contribution product hours Debbie 22,050 63,000 9.8 617400 trish 6,600 55,000 3.18 174900 Sarah 31,200 48,000 17.71 850080 mike 10,800 24,000 5.5 132000 sewing kit 23,660 338,000 3.68 1243840 total hours required 94,310 3018220 answer 5) highest price will be   $12direct labor rate +$12.22 contribution margin per hours 24.22 answer

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