Please answer questions 1 through 3. Please make the answers very clear and refer to the images attached.Notice that the first three questions require answers for Debbie, Trish, Sarah, Mike and Sewing Kit. Problem 11-25 (Algo) Volume Trade-Off Decisions [LO11-5, LO11-6] The 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 61,000 $ 20.00 $ 5.40 $ 3.60 Trish 53,000 $ 6.50 $ 2.20 $ 1.44 Sarah 46,000 $ 33.50 $ 8.09 $ 6.30 Mike 44,400 $ 14.00 $ 3.10 $ 4.50 Sewing kit 336,000 $ 9.10 $ 4.30 $ 0.99 The following additional information is available: The company’s plant has a capacity of 113,140 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 $9 per hour is expected to remain unchanged during the coming year. Fixed manufacturing costs total $630,000 per year. Variable overhead costs are $2 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? 4. Assuming that direct labor-hours is the company’s 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 113,140 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)?

Please answer questions 1 through 3. Please make the answers very clear and refer to the images attached.Notice that the first three questions require answers for Debbie, Trish, Sarah, Mike and Sewing Kit. Problem 11-25 (Algo) Volume Trade-Off Decisions [LO11-5, LO11-6] The 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 61,000 $ 20.00 $ 5.40 $ 3.60 Trish 53,000 $ 6.50 $ 2.20 $ 1.44 Sarah 46,000 $ 33.50 $ 8.09 $ 6.30 Mike 44,400 $ 14.00 $ 3.10 $ 4.50 Sewing kit 336,000 $ 9.10 $ 4.30 $ 0.99 The following additional information is available: The company’s plant has a capacity of 113,140 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 $9 per hour is expected to remain unchanged during the coming year. Fixed manufacturing costs total $630,000 per year. Variable overhead costs are $2 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? 4. Assuming that direct labor-hours is the company’s 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 113,140 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)?

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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Problem 11-25 (Algo) Volume Trade-Off Decisions [LO11-5, LO11-6]

The 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	61,000	$ 20.00	$ 5.40	$ 3.60
Trish	53,000	$ 6.50	$ 2.20	$ 1.44
Sarah	46,000	$ 33.50	$ 8.09	$ 6.30
Mike	44,400	$ 14.00	$ 3.10	$ 4.50
Sewing kit	336,000	$ 9.10	$ 4.30	$ 0.99

The following additional information is available:

The company’s plant has a capacity of 113,140 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 $9 per hour is expected to remain unchanged during the coming year.
Fixed manufacturing costs total $630,000 per year. Variable overhead costs are $2 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?

4. Assuming that direct labor-hours is the company’s 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 113,140 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)?

### Direct Labor Hours Calculation

**Objective:**
Determine the direct labor hours used to manufacture one unit of each of the company's five products.

**Instructions:**
- Do not round intermediate calculations.
- Round your answers to two decimal places.

**Products:**
- Debbie
- Trish
- Sarah
- Mike
- Sewing Kit

**Input Table:**
- A table is provided with columns for each product.
- Under the table header "Direct labor hours per unit", input the required data for each product.

**Navigation:**
- There are tabs labeled from "Required 1" to "Required 5" for different sections or steps of the calculation process.
- The current focus is on "Required 2", indicated by a highlighted button, with navigation options to switch between different tabs.

By accurately completing this table, you'll be able to understand the labor requirements for each product, which is essential for effective workforce planning and cost analysis.

### Variable Overhead Cost Analysis

#### Overview
This section addresses the calculation of variable overhead costs for manufacturing one unit of each of the company’s five products. The table provides a framework for inputting the variable overhead cost per unit for each product.

#### Instructions
- **Objective:** Determine how much variable overhead cost is incurred for each product.
- **Calculation Note:** Do not round intermediate calculations. Final answers should be rounded to 2 decimal places.

#### Products Analyzed
1. Debbie
2. Trish
3. Sarah
4. Mike
5. Sewing Kit

#### Interactive Features
- The table includes input fields for entering the variable overhead cost per unit for each product.
- Navigate between different sections using the buttons labeled "Required 1" and "Required 3" to input or review data as needed.

This structure is crucial for financial planning and ensuring accurate cost management in the manufacturing process.

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