Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:
Production and sales volume | 64,000 units | 40,000 units |
Selling price | $16.00 | $29.00 |
Direct material | $2.50 | $ 5.00 |
Manufacturing overhead | $1.70 | $ 3.00 |
Selling and administrative | $4.30 | $ 7.00 |
Operating profit | $3.20 | $ 6.80 |
Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information:
Activity | Activity cost | Activity-cost driver |
Supervision | $107,520 | Direct labor hours (DLH) |
Inspection | $70,200 | Inspections |
T-SHIRTS | SWEATSHIRTS |
0.75 DLH/unit | 1.20 DLH/unit |
48,000 DLHs | 48,000 DLHs |
40,000 inspections | 18,500 inspections |
Under the revised ABC system, overhead costs per unit for the Sweatshirts will be ________. (Do not round interim calculations. Round the final answer to the nearest cent)
◦ $1.19 per unit
◦ $1.20 per unit
◦ $1.90 per unit
◦ $1.58 per unit