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Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 72,000 units 35,000 units
Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows: T-SHIRTS SWEATSHIRTS Production and sales volume 72,000 units 35,000 units Selling price $19.00 $29.00 Direct material $2.40 $ 5.00 Direct labor $4.40 $ 7.20 Manufacturing overhead $4.70 $ 3.00 Gross profit $ 7.50 $13.80 Selling and administrative $4.30 $ 7.00 Operating profit $3.20 $ 6.80 Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Activity Activity cost Activity - cost driver Supervision $126,720 Direct labor hours (DLH) Inspection $94,800 Inspections Activities demanded T-SHIRTS SWEATSHIRTS 0.75 DLH/unit 1.2 DLH/unit 54,000 DLHs 42,000 DLHs 60,000 inspections 19,000 inspections Under the revised ABC system, the activity - cost driver rate for the supervision activity is A. $1.32 B. $3.02 C. $2.35 OD. $1.20
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