Fleet Street Incorporated, a manufacturer of high$-$fashion clothing for women, is located in south London in the United Kingdom. Its product line consists of trousers $(45\%),$ skirts $(35\%),$ dresses $(15\%),$ and other $(5\%).$ Fleet Street has been using a volume$-$based rate to assign overhead to each product; the rate it uses is $2\mathrm{.}25$ per unit produced. The results for the trousers line, using the volume$-$based approach, are as follows: Fleet Street Incorporated, a manufacturer of high$-$fashion clothing for women, is located in south London in the United Kingdom. Its

product line consists of trousers $(45\%),$ skirts $(35\%),$ dresses $(15\%),$ and other $(5\%).$ Fleet Street has been using a volume$-$based rate to

assign overhead to each product; the rate it uses is $2\mathrm{.}25$ per unit produced. The results for the trousers line, using the volume$-$based

approach, are as follows:

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:

Required:

Determine the profit margin for the trousers line using ABC.

Number of units produced $10,000$

Price $($all figures in $)20\mathrm{.}525$

Total revenue $205,250$

Direct materials $33,750$

Direct labor $112,500$

Overhead $($volume$-$based$)22,500$

Total product cost $168,750$

Nonmanufacturing expenses $31,500$

Total cost $200,250$

Profit margin for trousers $5,000$

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 $22,000$

Grading $19,000$

Lay planning $18,500$

Sewing $21,000$

Finishing $14,300$

Inspection $6,500$

Boxing up $3,500$

Storage $7,000$

Required:

Determine the profit margin for the trousers line using ABC.