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/Unit Direct Materials Direct Labor
- Marcy 32,000 $33.00 $4.00 $4.20
- Tina 36,000 $26.00 $1.40 $2.40
- Cari 46,000 $21.00 $4.20 $8.40
- Lenny 54,000 $19.00 $3.50 $5.40
- Sewing kit 450,000 $12.00 $1.30 $2.40
The following additional information is available:
a. The company's plant has a capacity of 151,400 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 $366,000 per year. Variable overhead costs are $5.00 per direct labor-hour.
d. All of the company's nonmanufacturing costs are fixed.
e. The company's finished goods inventory is negligible and can be ignored.
Required:
What is the highest price, in terms of a rate per hour, that Brandilyn Toy Company should be willing to pay for additional capacity (that is, for added direct labor time)? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Highest price $________________ per hour