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
|
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
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$4.00
|
$7.00
|
|
Operating profit
|
$3.50
|
$6.80
|
Required:
Q1. 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?
Q2. Under the revised ABC system, the activity-cost driver rate for the supervision activity is ________.
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