1. How many total direct labour-hours will be required to produce the units estimated to be sold during the coming year? Show your computations.
1. How many total direct labour-hours will be required to produce the units estimated to be sold during the coming year? Show your computations.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5TIF
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Question
Soft and Cuddly Friends (SCF) produces soft dolls. Demand for the dolls is increasing, and management wants you to identify an economical sales and production mix for the coming year. The following information is available:
Softy | Friendly | Goody | Besty | Lovey | |||||||||||||||
Demand (units) | 80,000 | 66,800 | 56,000 | 64,000 | 114,000 | ||||||||||||||
Price per unit | $ | 37.00 | $ | 30.00 | $ | 27.00 | $ | 19.00 | $ | 23.00 | |||||||||
Variable costs: | |||||||||||||||||||
Direct materials | 3.70 | 2.90 | 5.50 | 4.10 | 2.50 | ||||||||||||||
Direct labour | 6.00 | 3.75 | 10.50 | 7.50 | 3.00 | ||||||||||||||
The following additional information is available:
- The company’s plant has a capacity of 120,000 direct labour-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.
- The direct labour rate is $15 per hour; this rate is expected to remain unchanged during the coming year.
- Fixed
manufacturing costs amount to $780,000 per year. Variableoverhead costs are $5 per direct labour-hour. - All of the company’s sales and administrative costs are fixed.
Required:
1. How many total direct labour-hours will be required to produce the units estimated to be sold during the coming year? Show your computations. (Round your answers to 2 decimal places.)
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