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CHECK FIGURE (1) Total direct labour-hours: 125,000 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: Lovey Softy 70,000 Friendly 58,800 Goody 49.000 $42.00 Besty 56,000 $20.00 100,000 $26.00 $11.00 $16.00 Demand (units) Price per unit Variable costs: Direct materials Direct labour 10.75 2.75 16.10 5.00 8.00 4.80 3.00 8.40 6.00 2.40 The following additional information is available: a. The company's plant has a capacity of 100.000 direct labour-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. b. The direct labour rate is $12 per hour; this rate is expected to remain unchanged during the coming year. c. Fixed manufacturing costs amount to $680,000 per year. Variable overhead costs are $4 per direct labour-hour. d. All of the company's sales and administrative costs are fixed. 2. Keeping in mind the direct labour-hour capacity, what should be the company's product mix for the upcoming year? Prepare a schedule in support of your recommendation. Softly Friendly Goody Besty Lovey Selling price 26.00 11.00 42.00 20.00 16.00 Less: Variable Costs DM DL Variable MOH TOTAL 8.00 2.40 10.75 4.80 1.60 17.15 2.75 3.00 1.00 6.75 16.10 8.40 2.80 27.30 5.00 6.00 2.00 13.00 0.80 11.20 CM 8.85 4.25 14.70 7.00 4.80 DLH/Unit 0.40 0.25 0.70 0.50 0.20 CM/DLH 22.13 17.00 21.00 14 DO 24.00 2 4 5 Sales Volume DLH 70.000 28,000 58,800 14,700 ###### ###### 56.000 28,000 ####### 20.000 Units to Produce 70.000 58.800 6.000 ####### (100000-(20,000+28.000+34,300+14,700)7/0.50

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