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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
$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?
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