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: Demand Selling Price Next Direct Direct Labor $ 3.60 $ 1.32 $ 7.20 $ 4.80 $ 0.72 year (units) per Unit Materials 62,000 $20.50 54,000 $ 7.00 47,000 56,000 337,000 Product Debbie Trish Sarah Mike $5.50 $2.30 $34.00 $15.00 $ 9.20 $8.24 $3.20 $4.40 Sewing kit The following additional information is available: a. 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. b. The direct labor rate of $12 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $640,000 per year. Variable overhead costs are $3 per direct labor-hour. d. All of the company's nonmanufacturing costs are fixed. e. The company's finished goods inventory is negligible and can be ignored.
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: Demand Selling Price Next Direct Direct Labor $ 3.60 $ 1.32 $ 7.20 $ 4.80 $ 0.72 year (units) per Unit Materials 62,000 $20.50 54,000 $ 7.00 47,000 56,000 337,000 Product Debbie Trish Sarah Mike $5.50 $2.30 $34.00 $15.00 $ 9.20 $8.24 $3.20 $4.40 Sewing kit The following additional information is available: a. 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. b. The direct labor rate of $12 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $640,000 per year. Variable overhead costs are $3 per direct labor-hour. d. All of the company's nonmanufacturing costs are fixed. e. The company's finished goods inventory is negligible and can be ignored.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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 84,160 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)?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbb9ee156-9992-4add-aa7f-150656b74d22%2F73733a9b-bbbd-45c5-b9e1-7dc0d8e4a01f%2Fspudgd8_processed.png&w=3840&q=75)
Transcribed Image Text: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 84,160 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 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:
Demand
Selling
Price
Next
year
Direct
Direct
(units) per Unit Materials
$20.50
$ 7.00
Product
Labor
$5.50
$2.30
$8.24
$3.20
$4.40
$ 3.60
$ 1.32
$ 7.20
$ 4.80
$ 0.72
Debbie
62,000
54,000
47,000
56,000
337,000 $ 9.20
Trish
Sarah
$34.00
Mike
$15.00
Sewing kit
The following additional information is available:
a. 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.
b. The direct labor rate of $12 per hour is expected to remain unchanged during the coming year.
c. Fixed manufacturing costs total $640,000 per year. Variable overhead costs are $3 per direct labor-hour.
d. All of the company's nonmanufacturing costs are fixed.
e. The company's finished goods inventory is negligible and can be ignored.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbb9ee156-9992-4add-aa7f-150656b74d22%2F73733a9b-bbbd-45c5-b9e1-7dc0d8e4a01f%2Fx93mcmq_processed.png&w=3840&q=75)
Transcribed Image Text: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:
Demand
Selling
Price
Next
year
Direct
Direct
(units) per Unit Materials
$20.50
$ 7.00
Product
Labor
$5.50
$2.30
$8.24
$3.20
$4.40
$ 3.60
$ 1.32
$ 7.20
$ 4.80
$ 0.72
Debbie
62,000
54,000
47,000
56,000
337,000 $ 9.20
Trish
Sarah
$34.00
Mike
$15.00
Sewing kit
The following additional information is available:
a. 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.
b. The direct labor rate of $12 per hour is expected to remain unchanged during the coming year.
c. Fixed manufacturing costs total $640,000 per year. Variable overhead costs are $3 per direct labor-hour.
d. All of the company's nonmanufacturing costs are fixed.
e. The company's finished goods inventory is negligible and can be ignored.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education