The Brandilyn 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 the best sales and production mix for the coming year. The company has provided the following data:
The company’s plant has a capacity of 140,400 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.
Determine the contribution margin per direct labor-hour expended on each product. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the \"$\" sign in your response.)
Calculate the the total direct labor-hours that will be required to produce the units estimated to be sold during the coming year. (Do not round intermediate calculations.)
What is the highest price, in terms of a rate per hour, that Brandilyn Toy Company should be willing to pay for additional capacity (that is, for added direct labor time)? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the \"$\" sign in your response.)
| The Brandilyn 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 the best sales and production mix for the coming year. The company has provided the following data: |
1 The contribution margin per direct labor hour of each product is calculated as under: Marcy Tina Cary Lenny Sewing Kit Direct labor hours per unit 0.45 0.20 0.70 0.55 0.20 Selling price per unit $ 35.00 $ 23.00 $ 21.00 $ 18.00 $ 12.00 Less: Variable cost Direct material $ 3.70 $ 3.10 $ 5.00 $ 3.00 $ 1.80 Direct labor $ 5.40 $ 2.40 $ 8.40 $ 6.60 $ 2.40 Variable Manufacturing overhead ($5 per DLHr) $ 2.25 $ 1.00 $ 3.50 $ 2.75 $ 1.00 Contribution margin per unt $ 23.65 $ 16.50 $ 4.10 $ 5.65 $6.80 Contribution margin per hour $ 52.56 $ 82.50 $ 5.86 $ 10.27 $ 34.00 $ 11.35 $ 6.50 $ 16.90 $ 12.35 $5.20 $ 25.22 $ 32.50 $ 24.14 $ 22.45 $ 26.00 2. The total direct labor hours that will be required to produce the units estimated to be sold during the year is computed as under: Demand Direct labor hours per unit Total Direct labor hours Marcy 26,000 0.45 11,700 Tina 48,000 0.20 9,600 Cary 34,000 0.70 23,800 Lenny 54,000 0.55 29,700 Sewing Kit 390,000 0.20 78,000 Total Direct labor hours 152,800 4. The highest price that Brandilyn Toy company should be willing to pay for additional capacity should be as under: Marcy Tina Cary Lenny Sewing Kit Direct labor hours per unit 0.45 0.20 0.70 0.55 0.20 Variable cost Direct material $ 3.70 $ 3.10 $ 5.00 $ 3.00 $ 1.80 Direct labor $ 5.40 $ 2.40 $ 8.40 $ 6.60 $ 2.40 Variable Manufacturing overhead ($5 per DLHr) $ 2.25 $1.00 $ 3.50 $ 2.75 $1.00 Variable cost per unit $ 11.35 $ 6.50 $ 16.90 $ 12.35 $ 5.20 Variable cost per hour $ 25.22 $ 32.50 $ 24.14 $22.45 $ 26.00 The highest cost that company should be willing to pay is $32.50 per hour.
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