I have done the calculations for the manufacturing cost already. The only thing I am not sure is that should I include the administrative expenses for the cost of producing one shirt? If yes, should I include the administrative expenses in the income statement (i.e. $825000) or the figure in the table (i.e. $572500) or even ($572500/2)? Thanks!

Tyrell Clothing Tyrell Clothing, Inc. is a clothing exporter with manufacturing facilities located inthe Highgarden. The company produces both pants and shirts for the export market, with its major customers being large retailers in other kingdoms. For the most recent year, the company prepared the income statement that appears below. This report was provided to potential investors and to Tyrell Clothing's banker. These parties told Tyrell Clothing that they wanted \"line of business\" data. In order to provide the detail for the separate \"Shirt" and \"Pants\" computations, Tyrell Clothing's accountant made the simplifying assumption that all costs were split equall},r between the \"Shirt' and \"Pants\" lines ofhusiness. Units 600,000 350,000 Shirts Pants Total Sales $3,000,000 $2,300,000 $5,300,000 Cost of goods sold 1,700 000 1 700 000 3 400 000 Gross prot $1,300,000 $1,100,000 $2,400,000 Administrative expenses (825,000) (825,000) (1,650,000) Interest expense {200,000 200,000 400 000 Income before income taxes $275,000 $75,000 $3 50,000 Income taxes 1 100,000 100,000 200 000 Net income $175 000 $25,000 $150,000 Tyrell Clothing's accountant has also assembled the following data. Cutting Department Workers' Wages $400,000 Foremen salaries 300,000 Materials 600,000 Other manufacturing overhead 1 100 000 $2 400 000 Stitching Department Workers' Wages $100,000 Foremen salaries 300,000 Materials 150,000 Other manufacturing overhead 450,000 El 000 000 Company Headquarters Quality control inspectors $3 00,000 Department heads 200,000 Factory superintendent 150,000 Company president 450,000 Headquarters staff 250,000 Headquarters overhead 300,000 $1,650,000 m Cutting Department Workers= hours spent on shirts 40,000 hours Workers= hours spent on pants 60 000 hours Total workers' hours 100,000 hours Cost of shirt materials $250,000 Cost ofpauts materials 350 000 Total cost of materials $600,000 Stitching Department Workers= hours spent on shirts 15,000 hours Workers= hours spent on pants 10 000 hours Total \\It'orlrers' hours 25,000 hours Cost of shirt materials $105,000 Cost ofpants materials 45,000 Total cost ofmatenals $150,000 Companp Headgnarters The quahty control inspectors, the department heads, and the factory superintendent spend almost all of their time either in the factory or doing work directly related to the factory. Only the company president spends a substantial amount of lime dealing with bankers, attorneys, investors, government ofcials, and so forth. The functions ofthe headquarters sta are explained more fully below. An activity-based costing (ABC) analysis onyrell Clothing's overhead costs reveals the following. Cutting Department Foremen: Foremeu in the Cutting Department. spend 60% oftheir time on issues relating to worker turnover (such as training new workers) and 40% ofthelr time on issues related to machine repairs. Overhead: Analysis of the overhead in the Cutting Department indicates the following: Related to worker turnover $300,000 Related to machine repairs 100,000 Related to materials ordered 100,000 Related to clothing design 500,000 General manufacturing overhead 100,000 Total $1 100 000 Stitching Department Foremen: Foremen in the Stitching Department spend 30% of their time on issues relating to Inspections: During the past year, 100 inspections were completed. Because of the many worker turnover (such as training new workers) and 70% of their time on issues related to machine repairs. different styles of shirts, and because of the greater number of cloth pieces that must be cut Overhead: Analysis of the overhead in the Stitching Department indicates the following: for each shirt, the quality control inspectors spend more of their time inspecting shirts than inspecting pants. 60 inspections were for shirts and 40 were for pants. Related to worker turnover $100,000 Related to machine repairs 150,000 Worker turnover: During the past year, 30 workers quit and were replaced. Of these 30, 15 Related to materials ordered worked on shirts and 15 worked on pants. 50,000 General manufacturing overhead 150,000 Total $450.000 Machine repairs: During the past year, there were 1,400 machine repairs necessary. Of these 1,400 repairs, 700 were for shirt machines and 700 were for pants machines Company Headquarters Clothing design: During the past year, there were 100 new clothing designs generated. Of A. Headquarters personnel time is spent as follows: these 100 new designs, 95 were for shirts and 5 were for pants. Department heads Quality control inspectors: 90% on inspections, 10% on miscellaneous other factory duties Materials orders: During the past year, 50 materials orders were placed. Of these 50 orders, 30% on issues related to clothing design issues, 45 were for shirt material and 5 were for pants material. 40% on issues related to worker turnover, and Factory superintendent: 30% on miscellaneous other factory duties Miscellaneous and general factory overhead items are considered to be facility support 50% on clothing design issues, 50% on miscellaneous other factory costs and are not allocated to either shirts or pants. duties Company president: 100% on administrative duties Headquarters staff 1. What is the cost to produce one shirt based on ABC analysis? 25% on materials orders 25% on issues related to worker turnover 25% on miscellaneous other factory duties 25% on company headquarters office duties B. Headquarters overhead is incurred as follows: 20% on materials orders 40% on issues related to worker turnover 20% on miscellaneous other factory duties 20% on company headquarters office duties The data related to overhead and cost drivers is summarized in the following exhibit with missing entries (a)-(s)- Costs Inspections Worker Machine Clothing Materials Miscellaneous& Total Admin Turnover Repairs Design Orders General Factory Cutting foremen $300,000 40 $180,000 $120,000 30 $300,000 Cutting overhead 1,100,000 0 300,000 100,000 300.000 100,000 100,000 1,100,000 Stitching foremen 300,00 90,000 210,000 300,000 Stitching overhead 450,000 100,000 150,000 50,000 150,000 $50,000 Quality control inspectors 100,00 270,000 0 30,000 00,000 Department heads 200,000 30,00 20,000 50,000 200,00 Factory superintendent 150,00 5,000 75,000 150,000 Company president 150,000 0 0 0 $450,000 Headquarters staff 250,000 0 62,50 0 0 62,500 52,500 187,500 62,500 Headquarters overhead 300,00 0 120,00 60,000 50,000 240,000 60,000 Total 13.800.000 270.000 5932 500 $580.000 $635.000 5272.500 :537.500 $1.227.500 $572.500 The following additional information relates to Tyrell Clothing's cost drivers