Author Question: Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed ... (Read 150 times)

jon_i · **on:** Mar 6, 2021

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:

T-SHIRTS

SWEATSHIRTS

Production and sales volume

72,000 units

26,250 units

Selling price

$15.00

$29.00

Direct material

$1.50

$ 5.00

Direct labor

$4.20

$ 7.20

Manufacturing overhead

$1.80

$ 3.00

Gross profit

$ 7.50

$13.80

Selling and administrative

$3.60

$ 7.00

Operating profit

$3.90

$ 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	$108,480	Direct labor hours (DLH)
Inspection	$93,000	Inspections

Activities demanded

T-SHIRTS	SWEATSHIRTS
0.75 DLH/unit	1.60 DLH/unit
54,000 DLHs	42,000 DLHs
60,000 inspections	17,500 inspections

Under the revised ABC system, total overhead costs allocated to Sweatshirts will be ________.
◦ $47,460
◦ $68,460
◦ $201,480
◦ None of these answers are correct.

nanny · **Reply #1 on:** Mar 6, 2021

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