ACCT 3121 - Cost Analysis and Control Assignment

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ACCT 3121 - Cost Analysis and Control Assignment - Louisiana State University, USA

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

 

T-SHIRTS

SWEATSHIRTS

Production and sales volume

60,000 units

35,000 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

Required -

1. What is projected operating income if direct materials costs of T-Shirts increase to $4.00 per unit and direct labor costs of Sweatshirts increase to $8.20 per unit?

2. Under the revised ABC system, the activity-cost driver rate for the supervision activity is ________.

Reference no: EM132459051

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