Demand for Stuffin’ Such stuffed animal shells and stuffing/finishing kits manufactured by RoseMarie Limited 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:

Demand for Stuffin’ Such stuffed animal shells and stuffing/finishing kits manufactured by RoseMarie Limited 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:

 

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Demand for Stuffin’ Such stuffed animal shells and stuffing/finishing kits manufactured by RoseMarie Limited 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:
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Product Demand
Next Year
(units)
Selling
Price
per Unit
Direct
Materials
Direct
Labour
  Teddy bear 14,000 $ 40 $ 5.30 $ 2.00
  Polar bear 9,000 $ 42 $ 4.10 $ 2.50
  Husky 10,000 $ 35 $ 3.30 $ 4.50
  Tiger 7,000 $ 37 $ 3.90 $ 6.50
  Stuffing/finishing kits 28,000 $ 22 $ 2.30 $ 1.50
 

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The following additional information is available:

 

a.

The company’s plant has a capacity of 17,325 direct labour-hours per year on a single-shift basis. The company’s current employees and equipment can produce all five products.

b. The direct labour rate of $10.00 per hour is expected to remain unchanged during the coming year.
c. Fixed costs total $180,000 per year. Variable overhead costs are $3.00 per direct labour-hour.
d. All of the company’s non-manufacturing costs are fixed.
e. The company’s finished goods inventory is negligible and can be ignored.

 

Required:
1.

Determine the contribution margin per direct labour-hour for each product . (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Teddy, Polar, Husky, Tiger and Stuffing/Finishing Kit

2.

Prepare a schedule showing the total direct labour-hours that will be required to produce the units estimated to be sold during the coming year.

Teddy, Polar, Husky, Tiger and Stuffing/Finishing Kit

What is the highest price, in terms of a rate per hour, that Stuffin’ Such should be willing to pay for additional capacity (that is, for added direct labour time) to fill all the estimated sales? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

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