Question
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
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 (22%), skirts (29%), dresses (15% ), and other (34%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is 2.70 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 E) Total revenue 31.86 382,320 Direct materials 62,800 Direct labor 209,800 Overhead (volume-based) 32,400 Total product cost 305,000 Nonmanufacturing expenses 56,900 Total cost 361,900 Profit margin for trousers 20.420 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 Finishing Inspection Boxing up Storage Required: 34,730 29.800 28,900 33,100 22,100 10,000 5,300 10,600 1. Determine the profit margin for trousers using ABC. Profit margin
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