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 (34%), skirts (30%), dresses (12%), and other (24%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is 2.24 per unit produced. The results for the trousers line, using the volume-based approach, are as follows:

Number of units produced 12,000

Price (all figures in ) 26.21

Total revenue 314,520

Direct materials 51,800

Direct labor 172,900

Overhead (volume-based) 26,880

Total product cost 251,580

Nonmanufacturing expenses 46,900

Total cost 298,480

Profit margin for trousers 16,040

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 31,450

Grading 27,100

Lay planning 26,400

Sewing 30,100 Finishing 20,200

Inspection 8,900

Boxing up 4,800 Storage 9,600

Required: 1. Determine the profit margin for trousers using ABC.