Fleet Street Incorporated a manufacturer of high-fashion clothing for women, is located in South London in...
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Fleet Street Incorporated a manufacturer of high-fashion clothing for women, is located in South London in the UK. Its product line consists of trousers (28%), skirts (34%), dresses (15%), and other (23%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is 2.50 per unit produced. The results for the trousers line, using the volume-based approach, are as follows: Number of units produced Price (all figures in ) Total revenue Direct materials Direct labor Overhead (volume-based) Total product cost Nonmanufacturing expenses Total cost Profit margin for trousers 10,000 29.75 297,500 48,900 163,000 25,000 236,900 44,200 281,100 16,400 Recently, Fleet Street conducted a further analysis of the trousers line of product, using ABC. In the study, eight activities were identified, and direct labor was assigned to the activities. The total conversion cost (labor and overhead) for the eight activities, after allocation to the trousers line, is as follows: Pattern cutting Grading Lay planning Sewing 32,650 28,200 27,500 31, 200 Finishing Inspection Boxing up Storage Required: 21, 200 9,600 5,200 10,400 1. Determine the profit margin for trousers using ABC. Profit margin Fleet Street Incorporated a manufacturer of high-fashion clothing for women, is located in South London in the UK. Its product line consists of trousers (28%), skirts (34%), dresses (15%), and other (23%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is 2.50 per unit produced. The results for the trousers line, using the volume-based approach, are as follows: Number of units produced Price (all figures in ) Total revenue Direct materials Direct labor Overhead (volume-based) Total product cost Nonmanufacturing expenses Total cost Profit margin for trousers 10,000 29.75 297,500 48,900 163,000 25,000 236,900 44,200 281,100 16,400 Recently, Fleet Street conducted a further analysis of the trousers line of product, using ABC. In the study, eight activities were identified, and direct labor was assigned to the activities. The total conversion cost (labor and overhead) for the eight activities, after allocation to the trousers line, is as follows: Pattern cutting Grading Lay planning Sewing 32,650 28,200 27,500 31, 200 Finishing Inspection Boxing up Storage Required: 21, 200 9,600 5,200 10,400 1. Determine the profit margin for trousers using ABC. Profit margin
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Related Book For
Cost Management A Strategic Emphasis
ISBN: 978-0078025532
6th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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