The Walton Toy Company manufactures a line of dolls and a sewingkit. Demand for the companyâs products is increasing, andmanagement requests assistance from you in determining aneconomical sales and production mix for the coming year. Thecompany has provided the following data:
Product Demand
Next year
(units) Selling
Price
per Unit Direct
Materials Direct
Labor Debbie 54,000 $ 23.00 $ 4.70 $ 5.40 Trish 46,000 $ 5.00 $ 1.50 $ 1.80 Sarah 39,000 $ 30.00 $ 7.04 $ 8.10 Mike 30,000 $ 14.00 $ 2.40 $ 6.30 Sewing kit 329,000 $ 8.40 $ 3.60 $ 1.35
The following additional information isavailable:
a. The companyâs plant has a capacity of 136,550 directlabor-hours per year on a single-shift basis. The companyâs presentemployees and equipment can produce all five products.
b. The direct labor rate of $9 per hour is expected to remainunchanged during the coming year.
c. Fixed manufacturing costs total $560,000 per year. Variableoverhead costs are $3 per direct labor-hour.
d. All of the companyâs nonmanufacturing costs are fixed.
e. The companyâs finished goods inventory is negligible and canbe ignored.
Required:
1. How many direct labor hours are used to manufacture one unitof each of the companyâs five products?
2. How much variable overhead cost is incurred to manufactureone unit of each of the companyâs five products?
3. What is the contribution margin per direct labor-hour foreach of the companyâs five products?
4. Assuming that direct labor-hours is the companyâsconstraining resource, what is the highest total contributionmargin that the company can earn if it makes optimal use of itsconstrained resource?
5. Assuming that the company has made optimal use of its 136,550direct labor-hours, what is the highest direct labor rate per hourthat Walton Toy Company would be willing to pay for additionalcapacity (that is, for added direct labor time)?
The Walton Toy Company manufactures a line of dolls and a sewingkit. Demand for the companyâs products is increasing, andmanagement requests assistance from you in determining aneconomical sales and production mix for the coming year. Thecompany has provided the following data:
| Product | Demand Next year (units) | Selling Price per Unit | Direct Materials | Direct Labor | |||
| Debbie | 54,000 | $ | 23.00 | $ | 4.70 | $ | 5.40 |
| Trish | 46,000 | $ | 5.00 | $ | 1.50 | $ | 1.80 |
| Sarah | 39,000 | $ | 30.00 | $ | 7.04 | $ | 8.10 |
| Mike | 30,000 | $ | 14.00 | $ | 2.40 | $ | 6.30 |
| Sewing kit | 329,000 | $ | 8.40 | $ | 3.60 | $ | 1.35 |
The following additional information isavailable:
a. The companyâs plant has a capacity of 136,550 directlabor-hours per year on a single-shift basis. The companyâs presentemployees and equipment can produce all five products.
b. The direct labor rate of $9 per hour is expected to remainunchanged during the coming year.
c. Fixed manufacturing costs total $560,000 per year. Variableoverhead costs are $3 per direct labor-hour.
d. All of the companyâs nonmanufacturing costs are fixed.
e. The companyâs finished goods inventory is negligible and canbe ignored.
Required:
1. How many direct labor hours are used to manufacture one unitof each of the companyâs five products?
2. How much variable overhead cost is incurred to manufactureone unit of each of the companyâs five products?
3. What is the contribution margin per direct labor-hour foreach of the companyâs five products?
4. Assuming that direct labor-hours is the companyâsconstraining resource, what is the highest total contributionmargin that the company can earn if it makes optimal use of itsconstrained resource?
5. Assuming that the company has made optimal use of its 136,550direct labor-hours, what is the highest direct labor rate per hourthat Walton Toy Company would be willing to pay for additionalcapacity (that is, for added direct labor time)?
Related questions
The Walton Toy Company manufactures a line of dolls and a sewingkit. Demand for the companyâs products is increasing, andmanagement requests assistance from you in determining aneconomical sales and production mix for the coming year. Thecompany has provided the following data:
| Product | Demand Next year (units) | Selling Price per Unit | Direct Materials | Direct Labor | |||
| Debbie | 65,000 | $ | 28.00 | $ | 4.20 | $ | 4.05 |
| Trish | 57,000 | $ | 6.00 | $ | 1.10 | $ | 1.26 |
| Sarah | 50,000 | $ | 35.00 | $ | 8.69 | $ | 6.75 |
| Mike | 40,000 | $ | 14.00 | $ | 3.50 | $ | 4.95 |
| Sewing kit | 340,000 | $ | 9.50 | $ | 4.70 | $ | 0.81 |
The following additional information isavailable:
The companyâs plant has a capacity of 116,330 direct labor-hoursper year on a single-shift basis. The companyâs present employeesand equipment can produce all five products.
The direct labor rate of $9 per hour is expected to remainunchanged during the coming year.
Fixed manufacturing costs total $535,000 per year. Variableoverhead costs are $2 per direct labor-hour.
All of the companyâs nonmanufacturing costs are fixed.
The companyâs finished goods inventory is negligible and can beignored.
Required:
1. How many direct labor hours are used to manufacture one unitof each of the companyâs five products?
2. How much variable overhead cost is incurred to manufactureone unit of each of the companyâs five products?
3. What is the contribution margin per direct labor-hour foreach of the companyâs five products?
4. Assuming that direct labor-hours is the companyâsconstraining resource, what is the highest total contributionmargin that the company can earn if it makes optimal use of itsconstrained resource?
5. Assuming that the company has made optimal use of its 116,330direct labor-hours, what is the highest direct labor rate per hourthat Walton Toy Company would be willing to pay for additionalcapacity (that is, for added direct labor time)?
The Walton Toy Company manufactures a line of dolls and a dolldress sewing kit. Demand for the dolls is increasing, andmanagement requests assistance from you in determining aneconomical sales and production mix for the coming year. Thecompany has provided the following data: |
| Product | Demand Next year (units) | Selling Price per Unit | Direct Materials | Direct Labor |
| Debbie | 70,000 | $38.00 | $4.70 | $3.50 |
| Trish | 62,000 | $ 4.60 | $1.60 | $1.00 |
| Sarah | 55,000 | $31.00 | $9.44 | $6.50 |
| Mike | 48,000 | $14.00 | $4.00 | $4.50 |
| Sewing kit | 345,000 | $ 10.00 | $5.20 | $0.50 |
| The following additionalinformation is available: |
| a. | The companyâs plant has a capacity of 94,500 direct labor-hoursper year on a single-shift basis. The companyâs present employeesand equipment can produce all five products. |
| b. | The direct labor rate of $10 perhour is expected to remain unchanged during the coming year. |
| c. | Fixed costs total $585,000 peryear. Variable overhead costs are $3 per direct labor-hour. |
| d. | All of the company'snonmanufacturing costs are fixed. |
| e. | The companyâs finished goodsinventory is negligible and can be ignored. |
| Required: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1. | Determine the contribution margin per direct labor-hour expendedon each product. (Do not round intermediate calculations.Round your answers to 2 decimal places.)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Walton Toy Company manufactures a line of dolls and a sewingkit. Demand for the companyâs products is increasing, andmanagement requests assistance from you in determining aneconomical sales and production mix for the coming year. Thecompany has provided the following data:
| Product | Demand Next year (units) | Selling Price per Unit | Direct Materials | Direct Labor | |||
| Debbie | 62,000 | $ | 20.50 | $ | 5.50 | $ | 3.60 |
| Trish | 54,000 | $ | 7.00 | $ | 2.30 | $ | 1.32 |
| Sarah | 47,000 | $ | 34.00 | $ | 8.24 | $ | 7.20 |
| Mike | 56,000 | $ | 15.00 | $ | 3.20 | $ | 4.80 |
| Sewing kit | 337,000 | $ | 9.20 | $ | 4.40 | $ | 0.72 |
The following additional information isavailable:
The companyâs plant has a capacity of 84,160 direct labor-hoursper year on a single-shift basis. The companyâs present employeesand equipment can produce all five products.
The direct labor rate of $12 per hour is expected to remainunchanged during the coming year.
Fixed manufacturing costs total $640,000 per year. Variableoverhead costs are $3 per direct labor-hour.
All of the companyâs nonmanufacturing costs are fixed.
The companyâs finished goods inventory is negligible and can beignored.
Required:
1. How many direct labor hours are used to manufacture one unitof each of the companyâs five products?
2. How much variable overhead cost is incurred to manufactureone unit of each of the companyâs five products?
3. What is the contribution margin per direct labor-hour foreach of the companyâs five products?
4. Assuming that direct labor-hours is the companyâsconstraining resource, what is the highest total contributionmargin that the company can earn if it makes optimal use of itsconstrained resource?
5. Assuming that the company has made optimal use of its 84,160direct labor-hours, what is the highest direct labor rate per hourthat Walton Toy Company would be willing to pay for additionalcapacity (that is, for added direct labor time)?
