What is the highest price in terms of a rate per hour that

Assignment Help Accounting Basics

Reference no: EM13570381

The Montrose 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	31,000	$35.00	$2.80	$5.40
Tina	49,000	$20.00	$2.70	$2.40
Cari	47,000	$25.00	$3.80	$9.60
Lenny	38,000	$18.00	$3.50	$6.00
Sewing kit	540,000	$11.00	$1.40	$1.20

The following additional information is available:

The company's plant has a capacity of 121,750 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products.

The direct labor rate of $12.00 per hour is expected to remain unchanged during the coming year.

Fixed costs total $316,000 per year. Variable overhead costs are $2.00 per direct labor-hour.

All of the company's nonmanufacturing costs are fixed.

The company's finished goods inventory is negligible and can be ignored.

2.	Calculate 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 Montrose Toy Company should be willing to pay for additional capacity (that is, for added direct labor time)? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Highest price

$ per hour

Reference no: EM13570381

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