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Author Question: Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed ... (Read 79 times)

clmills979

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

T-SHIRTSSWEATSHIRTS
Production and sales volume204,000 units34,000 units
Selling price$18.00$29.00
Direct material$1.60$ 5.00
Direct labor$4.30$ 7.20
Manufacturing overhead$4.60$ 3.00
Gross profit$ 7.50$13.80
Selling and administrative$3.50$ 7.00
Operating profit$4.00$ 6.80

Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information:

ActivityActivity costActivity-cost driver
Supervision$130,560Direct labor hours (DLH)
Inspection$69,300Inspections

Activities demanded
T-SHIRTSSWEATSHIRTS
0.25 DLH/unit1.50 DLH/unit
51,000 DLHs51,000 DLHs
30,000 inspections19,500 inspections
Using an ABC system, next year's estimates show manufacturing overhead costs will total $227,300 for 46,000 T-shirts. If all other T-shirt costs and sales prices remain the same, the profitability that can be expected is ________. (Round the final answer to the nearest whole cent.)
◦ $8.60 per t-shirt
◦ $4.94 per t-shirt
◦ $3.66 per t-shirt
◦ ($0.27) per t-shirt


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Marked as best answer by clmills979 on Mar 6, 2021

sultansheikh

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clmills979

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Reply 2 on: Mar 6, 2021
Great answer, keep it coming :)


tkempin

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Reply 3 on: Yesterday
Wow, this really help

 

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