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

question 85

Multiple Choice

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.

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Definitions:

Market Value

Market value is the price at which an asset would trade in a competitive auction setting, reflecting what a buyer is willing to pay.

Variable Manufacturing Costs

Variable manufacturing costs are expenses that fluctuate with production volume, such as raw materials and direct labor costs.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating how much contributes to covering fixed costs and generating profit.

Production Capacity

The maximum amount of goods or services that a facility can produce over a given time period under normal operating conditions.