ABC; product profitability

Outerwear Inc. is concerned about the profitability of its regular gloves. Company managers are considering producing only the top$-$quality, fleece lined, gloves. The company is currently assigning the

$$3,200,000$ of overhead costs to both types of gloves based on machine hours. Of the overhead, $$1,280,000$ is utilities related and the remainder is primarily related to quality control inspectors' salaries.

The following information about the products is also available.

a$.$ Determine the total overhead cost assigned to each type of gloves using the current allocation system.

Total OH assigned to regular gloves: $

Total OH assigned to fleece$-$lined gloves: $

b$.$ Determine the total overhead cost assigned to each type of gloves if more appropriate cost drivers were used.

Total OH assigned to regular gloves: $

Total OH assigned to fleece$-$lined gloves: $$

c$.$ Determine the profit before tax for regular and fleece$-$lined gloves based on the overhead cost assignment in part $($b$).$

Profit before tax for regular gloves: $

Profit before tax for fleece$-$lined gloves: $

$0$

ABC; product profitability

Outerwear Inc. is concerned about the profitability of its regular gloves. Company managers are considering producing only the top$-$quality, fleece lined, gloves. The company is currently assigning the

$$3,200,000$ of overhead costs to both types of gloves based on machine hours. Of the overhead, $$1,280,000$ is utilities related and the remainder is primarily related to quality control inspectors' salaries

The following information about the products is also available.

a$.$ Determine the total overhead cost assigned to each type of gloves using the current allocation system.

Total OH assigned to regular gloves: $

Total OH assigned to fleece$-$lined gloves: $

b$.$ Determine the total overhead cost assigned to each type of gloves if more appropriate cost drivers were used.

Total OH assigned to regular gloves: $

Total OH assigned to fleece$-$lined gloves: :

c$.$ Determine the profit before tax for regular and fleece$-$lined gloves based on the overhead cost assignment in part $($b$).$

Profit before tax for regular gloves: $

Profit before tax for fleece$-$lined gloves: $

$0$