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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 Selling Price year (units) per Unit $ 16.70 Debbie Trish $ 7.50 Sarah 35,000 $ 26.60 Mike 40,000 $ 14.00 Sewing kit 325,000 $ 9.60 The following additional information is available: 50,000 42,000 Direct Materials $ 4.30 $ 1.10 $ 6.44 $ 2.00 $ 3.20 Direct Labor $ 6.40 $ 4.00 $ 11.20 $ 8.00 $ 3.20 a. The company's plant has a capacity of 130,000 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 $16 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $520,000 per year. Variable overhead costs are $2 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. 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?

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 Selling Price year (units) per Unit $ 16.70 Debbie Trish $ 7.50 Sarah 35,000 $ 26.60 Mike 40,000 $ 14.00 Sewing kit 325,000 $ 9.60 The following additional information is available: 50,000 42,000 Direct Materials $ 4.30 $ 1.10 $ 6.44 $ 2.00 $ 3.20 Direct Labor $ 6.40 $ 4.00 $ 11.20 $ 8.00 $ 3.20 a. The company's plant has a capacity of 130,000 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 $16 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $520,000 per year. Variable overhead costs are $2 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. 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?

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
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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 Next Selling Price year (units) per Unit $16.70 $ 7.50 $26.60 50,000 42,000 35,000 40,000 $ 14.00 325,000 $ 9.60 The following additional information is available: Product Debbie Trish Sarah Mike Sewing kit a. The company's plant has a capacity of 130,000 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 $16 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $520,000 per year. Variable overhead costs are $2 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. Direct Materials $ 4.30 $1.10 $6.44 $ 2.00 $ 3.20 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 130,000 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)? Required 1 Required 2 Complete this question by entering your answers in the tabs below. Direct Labor $ 6.40 $ 4.00 $11.20 $ 8.00 $ 3.20 Required 3 Direct labor hours per unit Required 4 Required 5 How many direct labor hours are used to manufacture one unit of each of the company's five products? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Debbie Trish Sarah Mike Sewing Kit
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 Next Selling Price year (units) per Unit $16.70 $ 7.50 $26.60 50,000 42,000 35,000 40,000 $ 14.00 325,000 $ 9.60 The following additional information is available: Product Debbie Trish Sarah Mike Sewing kit a. The company's plant has a capacity of 130,000 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 $16 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $520,000 per year. Variable overhead costs are $2 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. Direct Materials $ 4.30 $1.10 $6.44 $ 2.00 $ 3.20 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 130,000 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)? Required 1 Required 2 Complete this question by entering your answers in the tabs below. Direct Labor $ 6.40 $ 4.00 $11.20 $ 8.00 $ 3.20 Required 3 Direct labor hours per unit Required 4 Required 5 How many direct labor hours are used to manufacture one unit of each of the company's five products? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Debbie Trish Sarah Mike Sewing Kit
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