Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profit
ID: 2431762 • Letter: T
Question
Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: TSHIRTS SWEATSHIRTS Production and sales volume Selling price Direct material Direct labor Manufacturing overhead Gross proft Selling and administrative 60,000 units $16.00 $ 2.00 $ 4.50 S 2.00 $ 7.50 $ 4.00 $ 3.50 35,000 units $29.00 $ 5.00 7.20 $3.00 $13.80 $7.00 Operating profit $6.80 What is projected operating income if direct materials costs of T-Shirts increase to $4.00 per unit and direct labor costs of Sweatshirts increase to $8.20 per unit? 15) Under the revised ABC system, the activity-cost driver rate for the supervision activity is A) $2.58 B) $2.40 C) $2.24 D) $1.16Explanation / Answer
Given T-SHIRTS SWEATSHIRTS Production and sales volume (In Units) 60,000 35,000 Selling price $ 16.00 $ 29.00 Direct material 2.00 5.00 Direct labor 4.50 7.20 manufacturing Overhead 2.00 3.00 Gross profit $ 7.50 $ 13.80 Selling and administrative 4.00 7.00 Operating profit 3.50 6.80 Revised income statement T-SHIRTS SWEATSHIRTS Total Production and sales volume (In Units) 60,000 35,000 Selling price $ 16.00 $ 29.00 Direct material 4.00 5.00 Direct labor 4.50 8.20 manufacturing Overhead 2.00 3.00 Gross profit $ 5.50 $ 12.80 Selling and administrative 4.00 7.00 Operating profit 1.50 5.80 x sales Units 60,000 35,000 Operating Income 90,000 203,000 293,000