The question is : Someone contacted the Tyrell Clothing's banker and alerted him to a mistake in the data collected from the Cutting Department. In fact, the foremen in the Cutting Department spend 90% of their time on issues relating to worker turnover and only 10% of their time on issues related to machine repairs (not 60% versus 40% as it was previously assumed). How will the cost to produce one shirt change based on this updated information? Explain why this happens.

Home Tools 3, Tyrell Clothing.pdf pdf.pdf X PS1.pdf ? Sign In 1 /4 + 100% do Share Export Clothing, Inc. Search 'Insert Page' Activity Based Costing Export Clothing, Inc. is a clothing exporter with manufacturing facilities located overseas. The company produces ' Export PDF both pants and shirts for the export market, with its major customers being large retailers in the United States. Lo Create PDF During the most recent year, Export Clothing produced 600,000 shirts and 350,000 pairs of pants. Adobe PDF Pack Export Clothing's accountant has assembled the Convert files to PDF and easily combine them with following data. other file types with a paid subscription Cutting Department Cutting Department Workers' wages $400,000 Workers' hours spent on shirts 40,000 hours Select File to Convert to PDF Foremen salaries 300,000 Workers' hours spent on pants 60,000 hours Materials 600,000 Total workers' hours 100,000 hours Other manufacturing overhead 1.100.000 Cost of shirt materials $250,000 $2.400.000 Cost of pants materials ro.co 350.000 Total cost of materials $600,000 Select File Stitching Department Stitching Department Workers' wages $100,000 Workers' hours spent on shirts 15,000 hours Edit PDF Foremen salaries 300,000 Workers' hours spent on pants 10,000 hours Materials 150,000 Total workers' hours 25,000 hours Comment Other manufacturing overhead 450.000 $1.000.000 Cours Combine Files EDOrganize Pages Company Headquarters Company Headquarters Quality control inspectors study $300,000 The quality control inspectors, the department heads, Redact Department heads 200,000 and the factory superintendent spend almost all of Factory superintendent 150,000 their time either in the factory or doing work directly Company president 450,000 related to the factory. Only the company president Create, edit and sign PDF Headquarters staff 250,000 spends a substantial amount of time dealing with Headquarters overhead bankers, attorneys, investors, government officials, forms & agreements 300.000 ared and so forth. The functions of the headquarters staff $1.650.000 are explained more fully below. Start Free TrialHome Tools 3, Tyrell Clothing.pdf pdf.pdf X PS1.pdf ? Sign In 2 /4 + 85% do Share An activity-based costing (ABC) analysis of Export Clothing's overhead costs reveals the following. Search 'Insert Page' Cutting Department Foremen: Foremen in the Cutting Department spend 60% of their time on issues relating to worker turnover (such as L' Export PDF training new workers) and 40% of their time on issues related to machine repairs. Overhead: Analysis of the overhead in the Cutting Department indicates the following: Lo Create PDF Related to worker turnover $300,000 Related to machine repairs 100,000 Related to materials ordered 100,000 Adobe PDF Pack Related to clothing design 500,000 Convert files to PDF and General manufacturing overhead 100,000 easily combine them with Total $1.100.000 other file types with a paid Stitching Department S subscription The materials used in the Stitching Department are all considered to be indirect materials such as thread, buttons, Select File to Convert to PDF and zippers. 70% of these materials are used in the shirts and 30% are used in the pants. Foremen: Foremen in the Stitching Department spend 30% of their time on issues relating to worker turnover (such as training new workers) and 70% of their time on issues related to machine repairs. Overhead: Analysis of the overhead in the Stitching Department indicates the following: Select File Related to worker turnover $100,000 Related to machine repairs 150,000 Related to materials ordered re 50,000 General manufacturing overhead 150.000 ursel Edit PDF Total $450.000 Company Headquarters Cou Comment A. Headquarters personnel time is spent as follows: Quality control inspectors: 90% on inspections, 10% on miscellaneous other factory duties Combine Files Department heads: 30% on issues related to clothing design issues, 40% on issues related to worker turnover, and 30% on miscellaneous other factory duties EDOrganize Pages Factory superintendent: 50% on clothing design issues, 50% on miscellaneous other factory duties Company president: 100% on administrative duties Headquarters staff: Redact 25% on materials orders 25% on issues related to worker turnover 25% on miscellaneous other factory duties 25% on company headquarters office duties Create, edit and sign PDF B. Headquarters overhead is incurred as follows: forms & agreements 20% on materials orders 40% on issues related to worker turnover 20% on miscellaneous other factory duties Start Free Trial 20% on company headquarters office dutiesHome Tools 3, Tyrell Clothing.pdf pdf.pdf X PS1.pdf ? Sign In 3 /4 + 85% do Share The data related to overhead and cost drivers is summarized in the following exhibit. Search 'Insert Page' Worker Machine Clothing Materials Costa Inspections Turnover Repal Design Ordera General Total Admin Cutting foremen $300,000 $180,000 $120,000 $0 $300,000 ' Export PDF Cutting overhead 1.100,000 300,000 100,000 500,000 100,000 100,000 1.100,000 Stitching foremen 300,000 90.000 210.00 300,000 Stitching overhead 450,000 100,000 150,000 50.000 150,000 450,000 Lo Create PDF Quality control inspectors 300,000 270,000 L 30,000 300,000 Department heads 200,000 0 80.000 80,000 80,000 200,000 Adobe PDF Pack Factory superintendent 150,000 75,000 75,000 150,000 Convert files to PDF and Company president 450,000 450,000 easily combine them with Headquarters staff 250,000 32.500 12.500 82.500 187,500 62,500 other file types with a paid Headquarters subscription verhead 300,000 120.000 60,000 60,000 240.000 60,000 Total $3 800 000 $270.000 $832 500 $580 000 5635.000 $272.500 $537 500 53.227.500 $572.500 Select File to Convert to PDF e The following additional information relates to Export Clothing's cost drivers. Select File Inspections: During the past year, 100 inspections were completed. Because of the many different styles of shirts, and because of the greater number of cloth pieces that must be cut for each shirt, the quality control inspectors spend more of their time inspecting shirts than inspecting pants. 80 inspections were for shirts and 20 were for pants. Edit PDF Worker turnover. During the past year, 30 workers quit and were replaced. Of these 30, 29 worked on shirts and 1 worked on pants Comment Machine repairs: During the past year, there were 1,400 machine repairs necessary. Of these 1,400 repairs, 1,200 were for shirt machines and 200 were for pants machines. Combine Files Clothing design: During the past year, there were 100 new clothing designs generated. Of these 100 new designs, 95 were for shirts and 5 were for pants. Materials orders: During the past year, 50 materials orders were placed. Of these 50 orders, 45 were for shirt EDOrganize Pages material and 3 were for pants material. Miscellaneous and general factory overhead items are considered to be facility support costs and are not Redact allocated to either shirts or pants. Questions: Create, edit and sign PDF 1. What is the cost to produce to one shirt? forms & agreements 2 What is the cost to produce one pair of pants? Start Free TrialHome Tools 3, Tyrell Clothing.pdf pdf.pdf X PS1.pdf ? Sign In 4 1 4 + 100% do Share Search 'Insert Page' Compute the predetermined rate for each cost driver event Lo Export PDF Number of Cost Driver Cost Driver Cost Pool Events Cost per Cost Driver Event Lo Create PDF Inspections $270,000 100 $2,700 per inspection Worker Turnover 932,500 30 $31,083.33 per new worker Machine Repair 580,000 1,400 $414.29 per repair Adobe PDF Pack Clothing Design 635,000 100 $6,350 per design Convert files to PDF and Materials Ordered 272,500 50 $5,450 per order easily combine them with other file types with a paid subscription Assign overhead to shirts and pants Select File to Convert to PDF Activity Shirts Pants Total Inspections $216,000 $54,000 $270,000 Worker turnover 901,417 31,083 932,500 Machine repairs 497,143 82,857 580,000 Clothing design 603,250 31,750 635,000 com Select File Materials orders 245,250 27,250 272,500 O.C What is the cost to product one shirt? What is the cost to produce one pair of pants? Edit PDF Comment Shirts Pants Total Cutting workers' wages $160,000 $240,000 $400,000 Cutting materials 250,000 350,000 600,000 Combine Files Stitching workers' wages Stitching materials res 60,000 40,000 100,000 105,000 45,000 150,000 EDOrganize Pages Inspections 216,000 54,000 270,000 Worker turnover dy 901,417 31,083 932,500 Machine repairs 497,143 82,857 580,000 Redact Clothing design 603,250 31,750 635,000 Materials orders 245,250 27,250 272,500 Total S Vi $3,038,060 $901,940 $3,940,000 Create, edit and sign PDF forms & agreements per unit $5.06 $2.58 Start Free Trial units 600,000 350,000