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Required 1 Required 2 Required 3 Required 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? (Do not round intermediate calculations. Round your final answer to a whole dollar amount.) Highest total contribution margin Required 5

Required 1 Required 2 Required 3 Required 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? (Do not round intermediate calculations. Round your final answer to a whole dollar amount.) Highest total contribution margin Required 5

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required 1 Required 2 Required 3 Required 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? (Do not round intermediate calculations. Round your final answer to a whole dollar amount.) Highest total contribution margin Required 5
Transcribed Image Text:Required 1 Required 2 Required 3 Required 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? (Do not round intermediate calculations. Round your final answer to a whole dollar amount.) Highest total contribution margin Required 5
The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company's products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data: Demand Next year Selling Price Product Debbie per Unit $28.50 $ 6.50 Trish (units) 56,000 48,000 41,000 32,000 331,000 Sarah Mike $ 40.50 $ 16.00 $8.60 Sewing kit The following additional information is available: Direct Materials $ 4.90 $ 1.70 $7.34 $ 2.60 $ 3.80 Direct Labor $4.40 $ 1.28 $ 6.80 $5.20 $ 0.88 a. The company's plant has a capacity of 120,140 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 $8 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $580,000 per year. Variable overhead costs are $5 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.
Transcribed Image Text:The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company's products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data: Demand Next year Selling Price Product Debbie per Unit $28.50 $ 6.50 Trish (units) 56,000 48,000 41,000 32,000 331,000 Sarah Mike $ 40.50 $ 16.00 $8.60 Sewing kit The following additional information is available: Direct Materials $ 4.90 $ 1.70 $7.34 $ 2.60 $ 3.80 Direct Labor $4.40 $ 1.28 $ 6.80 $5.20 $ 0.88 a. The company's plant has a capacity of 120,140 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 $8 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $580,000 per year. Variable overhead costs are $5 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.
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