Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed...
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Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 168,000 units 30,000 units Selling price $15.00 $29.00 Direct material $2.20 $5.00 Direct labor $4.10 $7.20 Manufacturing overhead $1.20 $3.00 Gross profit $7.50 $13.80 Selling and administrative $4.10 $7.00 Operating profit $3.40 $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 $128,700 Direct labor hours (DLH) Inspection $134,250 Inspections Activities demanded T-SHIRTS SWEATSHIRTS 0.25 DLH/unit 1.6 DLH/unit 42,000 DLHS 48,000 DLHS 70,000 inspections 19,500 inspections Under the revised ABC system, the activity - cost driver rate for the supervision activity is O A. $1.50 OB. $2.68 O C. $1.43 D. $3.06
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