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

Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information:

Under the revised ABC system, total overhead costs allocated to Sweatshirts will be ________.
A) $47,460
B) $68,460
C) $201,480
D) None of these answers are correct.

Question

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

Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information:

Under the revised ABC system, total overhead costs allocated to Sweatshirts will be ________.
A) $47,460 
B) $68,460 
C) $201,480 
D) None of these answers are correct.

Quizplus · Accepted Answer

$93,000 / (60,000 inspections + 17,500 inspections) = $1.20 per inspection × 17,500 = $21,000 plus
$108,480 / (54,000 dlh + 42,000 dlh) = $1.13 per dlh × 42,000 dlh = $47,460;
$21,000 + $47,460 = $68,460

Tiger Pride Produces Two Product Lines: T-Shirts and Sweatshirts