Problem D ch 10 HW c Not secure l eztam mtpx connect ch Que

Problem D ch 10 HW (--) c Not secure l eztam m.tpx connect ch Question 5 (of 6) value 5.00 points Problem 10-25A Utilization of a Constrained Resource [LO10-5, LO10-6) The Walton Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the dolls 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 Next year PriceDirectDirect (units) per Unit Materials Labor 50,000 $13.50 $4.30 $3.20 42,000 5.50 $1.10 $2.00 35,000 $21.00 $6.44 $5.60 40,000 $10.00 $2.00 $4.00 325,000 8.00 $3.20 $1.60 Product Debble Trish Sarah Mike Sewing kit The following additional information is available a. The company\'s plant has a capacity of 130000 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 $8 per hour is expected to remain unchanged during the coming year C. Fixed costs total $520 000 per year Variable overhead costs are S2 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: Determine the contribution margin per direct labor-hour expended on each product (Do not round intermediate calculations. Round your answers to 2 decimal places.) Contribution Product Margin per

Solution

Req 1: DEBBIE TRISH SARAH MIKE SEWING KIT Labour cost per unit 3.20 2.00 5.60 4.00 1.60 labour rate perr hour 8.00 8.00 8.00 8.00 8.00 labour horus per unit required 0.40 0.25 0.70 0.50 0.20 Req 2 DEBBIE TRISH SARAH MIKE SEWING KIT Labour cost per unit 3.20 2.00 5.60 4.00 1.60 labour rate perr hour 8.00 8.00 8.00 8.00 8.00 labour horus per unit required 0.40 0.25 0.70 0.50 0.20 Variable OH rate per hour 2.00 2.00 2.00 2.00 2.00 variable cost per unit 0.80 0.50 1.40 1.00 0.40 Req 3: DEBBIE TRISH SARAH MIKE SEWING KIT Selling price 13.50 5.50 21.00 10.00 8.00 Less: variable cost Material 4.30 1.10 6.44 2.00 3.20 Labour 3.20 2.00 5.60 4.00 1.60 Overheads 0.80 0.50 1.40 1.00 0.40 Contribution margin per unt 5.20 1.90 7.56 3.00 2.80 Divide: Labour hrs 0.40 0.25 0.70 0.50 0.20 Contribution mamrgin per hour 13.00 7.60 10.80 6.00 14.00 Ranking II IV III V I Req 4: Total Hours available: 130000.00 Less: Distributed in order of ranking Sewing Kit (325000*0.20) 65000 Debbie( 50000*0.40) 20000 Sarah (35000*0.70) 24500 Trish (42000*0.25) 10500 Hours available for Mike 10000 Contribution earned Hrs Contribution per hour Contributuon mrgin Debbie 20000 13 260000 Trish 10500 7.6 79800 Sarah 24500 10.8 264600 Mike 10000 6 60000 Sewing kit 65000 14 910000 Total OH 1574400 Req 5: Additional hourrs will be used for production of Mike only. Therefore, the company is ready to pay only additional contribution margin per hour of mike. Maximum prie per hour to be paid: Exiting rate 8 Add: Contribution margin per hour of Mike 6 Maximum price per hour to be paid: 14