The brandilyn toy company manufactures a line of dolls and, Ask an Expert

Accounting

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:

Product	Demand Next year (units)	Selling Price per Unit	Direct Materials	Direct Labor
Marcy	18,000	$35.00	$3.30	$4.80
Tina	33,000	$25.00	$1.40	$2.40
Cari	30,000	$22.00	$5.20	$9.00
Lenny	55,000	$18.00	$2.30	$6.60
Sewing kit	510,000	$17.00	$1.30	$1.80

The following additional information is available:

a.	The company's plant has a capacity of 129,750 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 $12.00 per hour is expected to remain unchanged during the coming year.
c.	Fixed costs total $296,000 per year. Variable overhead costs are $6.00 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.	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.)

Product	Contribution margin per DLH
Marcy	$
Tina	$
Cari	$
Lenny	$
Sewing Kit	$

2.	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.)

Product	Total DLHs
Marcy
Tina
Cari
Lenny
Sewing Kit

Total DLHs required

4.	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.)

Highest price

$ per hour

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9953857

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