THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 33 THROUGH 37.

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:

T-SHIRTSSWEATSHIRTS

Production and sales volume60,000 units35,000 units

Selling price$16.00$29.00

Direct material$ 2.00$ 5.00

Direct labor$ 4.50$ 7.20

Manufacturing overhead$ 2.00$ 3.00

Gross profit$ 7.50$13.80

Selling and administrative$ 4.00$ 7.00

Operating profit$ 3.50$ 6.80

Tiger Prides managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information:

ActivityActivity costActivity-cost driver

Supervision$100,920Direct labor hours (DLH)

Inspection $124,000Inspections

Activities demanded

T-SHIRTSSWEATSHIRTS

0.75 DLH/unit1.2 DLH/unit

45,000 DLHs42,000 DLHs

60,000 inspections17,500 inspections