Next year 45,000 700 $29 00 $13 00 $ 8 30 S1 40 32,000 328,000 $2.30 $3 50 $6 80

Question

Next year 45,000 700 $29 00 $13 00 $ 8 30 S1 40 32,000 328,000 $2.30 $3 50 $6 80 $5 20 a The company's plant has a capacity of 137,510 direct labor-hours per year on a single-shit basis. The company's present employees and equipment can produce at tiv b. The direct labor rate of $8 per hour is expected to remain unchanged during the c. Fixed costs total $550,000 per year coming year e The company's finished goods inventory is negligible and can be ignored 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 OType here to

Explanation / Answer

Req 1: Direct labour hours per unit of each product produce DEBBLE TRISH SARAH MIKE SEWING MACHINE Direct labour cost in $ per unit 4.4 1.76 6.8 5.2 1.36 Labour rate per hour in $ 8 8 8 8 8 Labour hours required per unit of output 0.55 0.22 0.85 0.65 0.17 Variable Overheads cost per unit of each Product DEBBLE TRISH SARAH MIKE SEWING MACHINE Labour hours required per unit of output 0.55 0.22 0.85 0.65 0.17 Variable Overhead rate per hour 2 2 2 2 2 Variable Overhead cost per unit 1.1 0.44 1.7 1.3 0.34 Contribution margin per direct labour hour DEBBLE TRISH SARAH MIKE SEWING MACHINE Selling Price per unit 19 7 29 13 8.3 Less: Variable cost per unit Direct Material 4.6 1.4 6.89 2.3 3.5 Direct Labour 4.4 1.76 6.8 5.2 1.36 Variable overheads 1.1 0.44 1.7 1.3 0.34 Contribution margin per unit 8.9 3.4 13.61 4.2 3.1 Labour hours per unit 0.55 0.22 0.85 0.65 0.17 Contribution margin per labour hour 16.18 15.45 16.01 6.46 18.24 Ranking Based on Highest Contribution II IV III V I Product Contribution per DLH Debble $16.18 Trish $15.45 Sarah $16.01 Mike $6.46 Sewing Machine $18.24 Req 2: DEBBLE TRISH SARAH MIKE SEWING MACHINE TOTAL Expected Demand 53000 45000 38000 32000 328000 Labour hours per unit 0.55 0.22 0.85 0.65 0.17 Total Labour hours Required 29150 9900 32300 20800 55760 147910 Product ToTal Hours Debble 29150 Trish 9900 Sarah 32300 Mike 20800 Sewing Machine 55760 Total Hours Required 147910 Req 3: Hours Available 137510 Less: Hours Used based on Ranking (as given in Req 1) Sewing Machine 55760 Debble 29150 Sarah 32300 Trish 9900 Remaining Hours used in Mike 10400 Product Hours Used Debble 29150 Trish 9900 Sarah 32300 Mike 10400 Sewing Machine 55760 Req 4: Total Contribution earned: Product Hours Used Contribution per DLH Total Contribution Debble 29150 16.18 471647 Trish 9900 15.45 152955 Sarah 32300 16.01 517123 Mike 10400 6.46 67184 Sewing Machine 55760 18.24 1017062.4 Total Contribution earned 2,225,971.40

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