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Question - Mister Tee's is a T-shirt manufacturing business with the following fact pattern:
T-shirts are processed in batches of 100.
One T-shirt requires one yard of fabric.
One yard of fabric costs $4.
Five direct labor hours are required to produce one batch of T-shirts.
Direct labor costs $20/hour.
Direct labor is applied at the beginning of the process.
Factory overhead is applied at a rate of 130% of Direct Labor Dollars.
Factory overhead is applied at the end of the process.
Required - If Mister Tee sells one T shirt for $8, what is the gross profit on one T Shirt?
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