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Fleet Street Incorporated a manufacturer of highfashion clothing for women. is located in South London in the UK. lts product line consists of trousers [21%],
Fleet Street Incorporated a manufacturer of highfashion clothing for women. is located in South London in the UK. lts product line consists of trousers [21%], skirts [28%], dresses (13%), and other [38%]. Fleet Street has been using a volume-based rate to assign overhead to each product: the rate it uses is 2.74 per unit produced. The results for the trousers line, using the volumebased approach. are as follows: Number of units produced 11,666 Price (all figures in E) 32.68 Total revenue 361,686 Direct materials 59,566 Direct labor 198,666 Overhead {volumebased} 36,146 Total product cost 288,246 Nonmanufacturing expenses 53,966 Total cost 342,146 Profit margin for trousers 19:543 Recently. Fleet Street conducted a further analysis ofthe 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) forthe eight activities, after allocation to the trousers line, is as follows: Pattern cutting 32,556 Grading 2?,?66 Lav planning 26,966 Sewing 36,966 Finishing 26,566 Inspection 9,266 Boxing up 5,666 Storage 16,666 Required: 1. Determine the profit margin for trousers using ABC. _:|
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