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2. Keeping in mind the direct labour-hour capacity, what should be the company's product mix for the upcoming year? Prepare a schedule in support of your recommendation. (Round "Per Unit" to 2 decimal places.)

2. Keeping in mind the direct labour-hour capacity, what should be the company's product mix for the upcoming year? Prepare a schedule in support of your recommendation. (Round "Per Unit" to 2 decimal places.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Soft and Cuddly Friends (SCF) produces soft dolls. Demand for the dolls is increasing, and management wants you to identify an economical sales and production mix for the coming year. The following Information is available: Demand (units) Price per unit Variable costs: Direct materials. Direct labour Softy 75,000 $ 28.50 13.25 6.00 Friendly 62,800 $ 13.50 5.25 3.75 The following additional Information is available: Goody 52,500 $ 44.50 18.60 10.50 Besty 60,000 $22.50 7.50 7.50 Lovey 187,000 18.50 $ 10.50 3.00 a. The company's plant has a capacity of 110,000 direct labour-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. b. The direct labour rate is $15 per hour, this rate is expected to remain unchanged during the coming year c. Fixed manufacturing costs amount to $730,000 per year. Varlable overhead costs are $6 per direct labour-hour. d. All of the company's sales and administrative costs are fixed. Required: 1. How many total direct labour-hours will be required to produce the units estimated to be sold during the coming year? Show your computations. (Round your answers to 2 decimal places.)
Transcribed Image Text:Soft and Cuddly Friends (SCF) produces soft dolls. Demand for the dolls is increasing, and management wants you to identify an economical sales and production mix for the coming year. The following Information is available: Demand (units) Price per unit Variable costs: Direct materials. Direct labour Softy 75,000 $ 28.50 13.25 6.00 Friendly 62,800 $ 13.50 5.25 3.75 The following additional Information is available: Goody 52,500 $ 44.50 18.60 10.50 Besty 60,000 $22.50 7.50 7.50 Lovey 187,000 18.50 $ 10.50 3.00 a. The company's plant has a capacity of 110,000 direct labour-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. b. The direct labour rate is $15 per hour, this rate is expected to remain unchanged during the coming year c. Fixed manufacturing costs amount to $730,000 per year. Varlable overhead costs are $6 per direct labour-hour. d. All of the company's sales and administrative costs are fixed. Required: 1. How many total direct labour-hours will be required to produce the units estimated to be sold during the coming year? Show your computations. (Round your answers to 2 decimal places.)
Required: 1. How many total direct labour-hours will be required to produce the units estimated to be sold during the coming year? Show your computations. (Round your answers to 2 decimal places.) Softy Friendly Goody Besty Lovey Answer is complete and correct. DLH Per Unit Show Transcribed Text 0.40 0.25 0.70 0.50 0.20 Product 2. Keeping in mind the direct labour-hour capacity, what should be the company's product mix for the upcoming year? Prepare a schedule in support of your recommendation. (Round "Per Unit" to 2 decimal places.) Softy Friendly Goody Besty Lovey Total hours required Answer is complete but not entirely correct. Estimated Sales (Units) Show Transcribed Text Direct Labour- Hour Per Unit 0.40 hours 0.25 hours 0.70 hours hours hours 3 0.50 0.20 Answer is complete but not entirely correct. Highest price per hour S 21 76,000 63.600 x 53,200 60,800 x 108,400 x Total Hours 30,400 X 15,900 37,240 30.400 X 21.680 X 135,620 x 3. What is the highest price, in terms of a rate per hour, that SCF would be willing to pay for additional capacity (Le., for added direct labour time)?
Transcribed Image Text:Required: 1. How many total direct labour-hours will be required to produce the units estimated to be sold during the coming year? Show your computations. (Round your answers to 2 decimal places.) Softy Friendly Goody Besty Lovey Answer is complete and correct. DLH Per Unit Show Transcribed Text 0.40 0.25 0.70 0.50 0.20 Product 2. Keeping in mind the direct labour-hour capacity, what should be the company's product mix for the upcoming year? Prepare a schedule in support of your recommendation. (Round "Per Unit" to 2 decimal places.) Softy Friendly Goody Besty Lovey Total hours required Answer is complete but not entirely correct. Estimated Sales (Units) Show Transcribed Text Direct Labour- Hour Per Unit 0.40 hours 0.25 hours 0.70 hours hours hours 3 0.50 0.20 Answer is complete but not entirely correct. Highest price per hour S 21 76,000 63.600 x 53,200 60,800 x 108,400 x Total Hours 30,400 X 15,900 37,240 30.400 X 21.680 X 135,620 x 3. What is the highest price, in terms of a rate per hour, that SCF would be willing to pay for additional capacity (Le., for added direct labour time)?
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