Lemon Yellow Company Produces Children's Clothing That Requires Two Processes

question 67

Essay

Lemon Yellow Company produces children's clothing that requires two processes, cutting and sewing, to complete.The company is concerned about one product, a hooded jacket, which hasn't been selling as well as it had in past years.Information related to the 20,000 jackets produced annually is shown in the following table:
$$\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 26,000 \\\hline \text { Direct labor } & \\\hline \text { Cutting Department (200 DLH } \times \$ 20 \text { per DL.H) } & \$ 4,000 \\\hline \text { Sewing Department (2,000DLH } \$ \$ 22 \text { per DLH) } & \$ 44,000 \\\hline \text { Machine hours } & \\\hline \text { Cutting Department } & 160 \mathrm { MH } \\\hline \text { Sewing Department } & 1,500 \mathrm { MH } \\\hline\end{array}$$ Lemon Yellow's total expected overhead costs and related overhead data are shown below.The company uses departmental overhead rates based on direct labor hours in the Cutting Department and machine hours in the Sewing Department.
$$\begin{array} { | l | r | r | } \hline & { \begin{array} { c } \text { Cuttirg } \\\text { Department }\end{array} } & { \begin{array} { c } \text { Sewing } \\\text { Department }\end{array} } \\\hline \text { Direct labor hours } & 16,000 \mathrm { DLH } & 175,000 \mathrm { DLH } \\\hline \text { Machine hours } & { 3 , 2 0 0 \mathrm { MH } } & 30,000 \mathrm { MH } \\\hline \begin{array} { l } \text { Manufacturing overhead } \\\text { costs }\end{array} & \$ 480,000 & \$ 240,000 \\\hline\end{array}$$ Assume this jacket currently sells for $10.How much profit does the company make per jacket?

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Definitions:

Pilot Study

A small-scale preliminary study conducted to evaluate feasibility, time, cost, risk, and adverse events, used to improve the design of a future full-scale research project.

Cross-Cultural Fairness

In assessment or testing, the principle of ensuring that tools and practices are equitable and do not favor one cultural group over others.

Item Response Theory

A theory and method in psychometrics that models the relationship between individuals' abilities or latent traits and their item responses, considering the properties of the items themselves.