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: Softy Friendly Goody Besty Lovey Demand (units) 86,000 71,600 60,200 68,800 122,400 Price per unit $ 49.00 $ 42.00 $ 39.00 $ 25.00 $ 35.00 Variable costs: Direct materials 4.90 4.10 7.90 5.90 3.70 Direct labour 6.00 3.75 10.50 7.50 3.00 The following additional information is available: a. The company’s plant has a capacity of 120,000 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 $840,000 per year. Variable 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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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:

		Softy		Friendly		Goody		Besty		Lovey
Demand (units)		86,000		71,600		60,200		68,800		122,400
Price per unit	$	49.00	$	42.00	$	39.00	$	25.00	$	35.00
Variable costs:
Direct materials		4.90		4.10		7.90		5.90		3.70
Direct labour		6.00		3.75		10.50		7.50		3.00

The following additional information is available:

a.	The company’s plant has a capacity of 120,000 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 $840,000 per year. Variable 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.)

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