he 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: 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 is available: The company’s plant has a capacity of 84,160 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products. The direct labor rate of $12 per hour is expected to remain unchanged during the coming year. Fixed manufacturing costs total $640,000 per year. Variable overhead costs are $3 per direct labor-hour. All of the company’s nonmanufacturing costs are fixed. The company’s 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 company’s five products? 2. How much variable overhead cost is incurred to manufacture one unit of each of the company’s five products? 3. What is the contribution margin per direct labor-hour for each of the company’s five products?
he 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:
| 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 is available:
-
The company’s plant has a capacity of 84,160 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.
-
The direct labor rate of $12 per hour is expected to remain unchanged during the coming year.
-
Fixed
manufacturing costs total $640,000 per year. Variableoverhead costs are $3 per direct labor-hour. -
All of the company’s nonmanufacturing costs are fixed.
-
The company’s 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 company’s five products?
2. How much variable overhead cost is incurred to manufacture one unit of each of the company’s five products?
3. What is the contribution margin per direct labor-hour for each of the company’s five products?
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