Product Debbie Trish Sarah Mike Sewing kit Demand Next year (units) 57,000 49,000 42,000 45,500 332,000 Selling Price pe
Posted: Wed May 04, 2022 4:28 pm
- Product Debbie Trish Sarah Mike Sewing Kit Demand Next Year Units 57 000 49 000 42 000 45 500 332 000 Selling Price Pe 1 (92.12 KiB) Viewed 31 times
direct labor-hours per year on a single-shift basis. The company’s
present employees and equipment can produce all five products.
The direct labor rate of $5 per hour is
expected to remain unchanged during the coming year.
Fixed manufacturing costs total $590,000 per
year. Variable overhead costs are $2 per direct labor-hour.
All of the company’s nonmanufacturing costs
are fixed.
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?
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 80,520
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)?
Product Debbie Trish Sarah Mike Sewing kit Demand Next year (units) 57,000 49,000 42,000 45,500 332,000 Selling Price per Unit $ 23.00 $ 7.00 $ 41.00 $ 10.00 $ 8.70 Direct Materials $ 5.00 $ 1.80 $ 7.49 $ 2.70 $ 3.90 Direct Labor $ 1.50 $ 0.60 $ 3.00 $ 2.00 $ 0.35