Demand for Stuffinâ Such stuffed animal shells and stuffing/finishing kits manufactured by RoseMarie Limited 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:
Product Demand
Next Year
(units) Selling
Price
per Unit Direct
Materials Direct
Labour Teddy bear 11,000 $ 40 $ 6.50 $ 1.50 Polar bear 9,000 $ 42 $ 5.30 $ 2.00 Husky 10,000 $ 35 $ 4.50 $ 4.00 Tiger 7,000 $ 37 $ 5.10 $ 6.00 Stuffing/finishing kits 18,000 $ 22 $ 3.50 $ 1.00
The following additional information is available:
a. The companyâs plant has a capacity of 12,250 direct labour-hours per year on a single-shift basis. The companyâs current employees and equipment can produce all five products.
b. The direct labour rate of $10.00 per hour is expected to remain unchanged during the coming year. c. Fixed costs total $195,000 per year. Variable overhead costs are $3.00 per direct labour-hour. d. All of the companyâs non-manufacturing costs are fixed. e. The companyâs finished goods inventory is negligible and can be ignored.
Required: 1. Determine the contribution margin per direct labour-hour expended on each product (the profitability index). (Do not round intermediate calculations. Round your answers to 2 decimal places.)
2. Prepare a schedule showing the total direct labour-hours that will be required to produce the units estimated to be sold during the coming year.
4. What is the highest price, in terms of a rate per hour, that Stuffinâ Such should be willing to pay for additional capacity (that is, for added direct labour time)? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
| Demand for Stuffinâ Such stuffed animal shells and stuffing/finishing kits manufactured by RoseMarie Limited 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: |
| Product | Demand Next Year (units) | Selling Price per Unit | Direct Materials | Direct Labour | ||||||||
| Teddy bear | 11,000 | $ | 40 | $ | 6.50 | $ | 1.50 | |||||
| Polar bear | 9,000 | $ | 42 | $ | 5.30 | $ | 2.00 | |||||
| Husky | 10,000 | $ | 35 | $ | 4.50 | $ | 4.00 | |||||
| Tiger | 7,000 | $ | 37 | $ | 5.10 | $ | 6.00 | |||||
| Stuffing/finishing kits | 18,000 | $ | 22 | $ | 3.50 | $ | 1.00 | |||||
| The following additional information is available: |
| a. | The companyâs plant has a capacity of 12,250 direct labour-hours per year on a single-shift basis. The companyâs current employees and equipment can produce all five products. |
| b. | The direct labour rate of $10.00 per hour is expected to remain unchanged during the coming year. |
| c. | Fixed costs total $195,000 per year. Variable overhead costs are $3.00 per direct labour-hour. |
| d. | All of the companyâs non-manufacturing costs are fixed. |
| e. | The companyâs finished goods inventory is negligible and can be ignored. |
| Required: | |
| 1. | Determine the contribution margin per direct labour-hour expended on each product (the profitability index). (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| 2. | Prepare a schedule showing the total direct labour-hours that will be required to produce the units estimated to be sold during the coming year. |
| 4. | What is the highest price, in terms of a rate per hour, that Stuffinâ Such should be willing to pay for additional capacity (that is, for added direct labour time)? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
Related questions
The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the companyâs 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:
| 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 additional information is available:
The companyâs plant has a capacity of 94,500 direct labor-hours per year on a single-shift basis. The companyâs present employees and equipment can produce all five products.
The direct labor rate of $10 per hour is expected to remain unchanged during the coming year.
Fixed manufacturing costs total $585,000 per year. Variable overhead costs are $3 per direct labor-hour.
All of the companyâs nonmanufacturing costs are fixed.
The companyâs finished goods inventory is negligible and can be ignored.
Required:
1. How many direct labor hours are used to manufacture one unit of each of the companyâs five products?
2. How much variable overhead cost is incurred to manufacture one unit of each of the companyâs five products?
3. What is the contribution margin per direct labor-hour for each of the companyâs five products?
4. Assuming that direct labor-hours is the companyâs constraining resource, what is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource?
5. Assuming that the company has made optimal use of its 94,500 direct labor-hours, what is the highest direct labor rate per hour that Walton Toy Company would be willing to pay for additional capacity (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 additional information isavailable:
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.
The direct labor rate of $10 per hour is expected to remainunchanged during the coming year.
Fixed costs total $585,000 per year. Variable overhead costs are$3 per direct labor-hour.
All of the company's nonmanufacturing costs are fixed.
The companyâs finished goods inventory is negligible and can beignored.
Required:
1. Determine the contribution margin per direct labor-hourexpended on each product. (Do not round intermediatecalculations. Round your answers to 2 decimal places.
2. Calculate the the total direct labor-hours that will berequired to produce the units estimated to be sold during thecoming year. (Do not round intermediatecalculations.)
3. Based on response to Requirement 1 & 2, how much of94,500 direct labor hours of capacity will be allocated to WaltonToy Companyâs various products?
4. What is the highest total contribution margin that thecompany can earn if it makes optimal use of its constrainedresource?
5. What is the highest price, in terms of a rate per hour, thatWalton Toy Company would be willing to pay for additional capacity(that is, for added direct labor time)? (Do not roundintermediate calculations. Round your answers to 2 decimalplaces.)
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.)
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