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Titan Pride produces two product lines: T-shirts and Sweatshirts. The company has used a simple costing system since its inception. The budgeted factory overhead totals
Titan Pride produces two product lines: T-shirts and Sweatshirts. The company has used a simple costing system since its inception. The budgeted factory overhead totals $242,000 and is allocated on the basis of 121,000 direct labor hours (DLHs). Additional production information for the two products is as follows: T-SHIRTS SWEATSHIRTS Production volume 60,000 units 35,000 units 1.2 1.4 DHLs (per unit) Direct costs (per unit) $ 6.50 $ 8.20 The company is currently considering implementing an ABC system to determine the unit costs of its products. The following ABC information has been collected: Activity Budgeted cost Cost allocation base Allocation base quantity Sweatshirts T-shirts 45,000 Supervision $100,920 42,000 DLHS Number of Inspections Inspection $141,080 53,040 17,500 Under the simple costing system, what is the predetermined overhead rate using DLH as the single cost driver? O $1.4 / DLH O $1.2 / DLH $2.6 / DLH O $2 / DLH Under the simple-costing system, what is unit cost of a sweatshirt? O $8.50 O $10.20 O $11.00 $9.60 Question 9 1 pts Under the ABC system, what is the overhead rate for the supervision activity? O $2.24/DLH O $1.16/DLH O $2/DLH $2.40/DLH Under the ABC system, the unit cost of a sweatshirt will be $10.59 $10.2 $11.36 $9.59 Question 11 1 pts Assume that the ABC provides more accurate cost information. Based on the above results, it can be inferred that, under simple costing, T-shirts (NOT sweatshirts) are properly costed More information is needed to answer this question O overcosted undercosted
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