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Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:
Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:T-SHIRTSSWEATSHIRTSProduction and sales volume60,000 units35,000 unitsSelling price$16.00$29.00Direct material$ 2.00$ 5.00Direct labor$ 4.50$ 7.20Manufacturing overhead$ 2.00$ 3.00Gross profit$ 7.50$13.80Selling and administrative$ 4.00$ 7.00Operating profit$ 3.50$ 6.80Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information:ActivityActivity costActivity-cost driverSupervision$100,920Direct labor hours (DLH)Inspection$124,000InspectionsActivities demandedT-SHIRTSSWEATSHIRTS0.75 DLH/unit1.2 DLH/unit45,000 DLHs42,000 DLHs60,000 inspections17,500 inspectionsUnder the revised ABC system, total overhead coast allocated to Sweatshirts will be:a. 76,730b. 48,720c. 224,920d. None
