The Brandilyn Toy Company manufactures a line of dolls and a
doll dress sewing kit. Demand...
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Accounting
The Brandilyn Toy Company manufactures a line of dolls and adoll dress sewing kit. Demand for the dolls is increasing, andmanagement requests assistance from you in determining the bestsales and production mix for the coming year. The company hasprovided the following data:
Product
Demand Next year (units)
Selling Price per Unit
Direct Materials
Direct Labor
Marcy
31,000
$35.00
$3.20
$5.40
Tina
47,000
$21.00
$1.50
$2.40
Cari
42,000
$23.00
$4.00
$8.40
Lenny
36,000
$19.00
$2.50
$5.40
Sewing kit
480,000
$14.00
$1.20
$1.20
The following additionalinformation is available:
a.
The company’s plant has a capacity of 103,650 direct labor-hoursper year on a single-shift basis. The company’s present employeesand equipment can produce all five products.
b.
The direct labor rate of $12.00per hour is expected to remain unchanged during the comingyear.
c.
Fixed costs total $346,000 peryear. Variable overhead costs are $4.00 per direct labor-hour.
d.
All of the company'snonmanufacturing costs are fixed.
e.
The company’s finished goods inventory is negligible and can beignored.
What is the highest price, in terms of a rate per hour, thatBrandilyn Toy Company should be willing to pay for additionalcapacity (that is, for added direct labor time)? (Do notround intermediate calculations. Round your answer to 2 decimalplaces.)
Answer & Explanation
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4.4 Ratings (596 Votes)
Marcy Tina Cari Lenny Sewing kit Direct labour cost per unit a 540 240 840 540 120 Direct labourhours per unit c a12 045 020 070 045 010 Selling price 3500 2100 2300 1900 1400 Variable costs Direct materials
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