Tiger Pride produces two product lines:

Tshirts

and Sweatshirts. Product profitability is analyzed as follows:

	TSHIRTS	SWEATSHIRTS
Production and sales volume	60,000 units	31,000 units
Selling price	$16.00	$29.00
Direct material	$4.00	$5.00
Direct labor	$4.50	$9.20
Manufacturing overhead	$2.00	$3.00
Gross profit	$5.50	$11.80
Selling and administrative	$4.00	$7.00
Operating profit	$1.50	$4.80

What is the projected decline in operating income if the direct materials costs of

TShirts

increase to

$5.50

per unit and direct labor costs of Sweatshirts increase to

$15.00

per unit?

Question content area bottom

Part 1

A.

$269,800

B.

$179,800

C.

$795,000

D.

$90,000