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, overhead costs per unit for the Sweatshirts will be ________. (Do not round interim calculations. Round the final answer to the nearest cent)
A) $1.19 per unit
B) $1.20 per unit
C) $1.90 per unit
D) $1.58 per unit

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, overhead costs per unit for the Sweatshirts will be ________. (Do not round interim calculations. Round the final answer to the nearest cent)
A) $1.19 per unit 
B) $1.20 per unit 
C) $1.90 per unit 
D) $1.58 per unit

Quizplus · Accepted Answer

$70,200 / (40,000 inspections + 18,500 inspections) = $1.20 per inspection x 18,500 = $22,200 plus $107,520 / (48,000 dlh + 48,000 dlh) = $1.12 per dlh x 48,000 dlh = $53,760
$22,200 + $53,760 = $75,960
$75,960 / 40,000 sweatshirts = $1.90

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