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What is the projected decline in operating income

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Reference no: EM133113393

Question - 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

31,000 units

Selling price

?$16.00

?$29.00

Direct material

$4.00

?$5.00

Direct labor

?$4.50

$9.20

Manufacturing overhead

?$2.00

?$3.00

Gross profit

$5.50

$11.80

Selling and administrative

?$4.00

?$7.00

Operating profit

$1.50

$4.80

Required - What is the projected decline in operating income if the direct materials costs of T-Shirts increase to $5.50 per unit and direct labor costs of Sweatshirts increase to $15.00 per? unit?

A. $269,800

B. $179,800

C. $795,000

D. $90,000

Reference no: EM133113393

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