Answer the Following Questions Using the Information Below:
Tiger Pride

question 56

Multiple Choice

Answer the following questions using the information below:
Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:
$\begin{array}{lrr}&\text { T-SHIRTS }&\text { SWEATSHIRTS }\\\text { Production and sales volume } & 60,000 \text { units } & 35,000 \text { units } \\\text { Selling price } & \$ 16.00 & \$ 29.00 \\\text { Direct material } & \$ 2.00 & \$ 5.00 \\\text { Direct labor } & \$ 4.50 & \$ 7.20 \\\text { Manufacturing overhead } & \$ 2.00 & \$ 3.00\\\text { Gross profit } & \$ 7.50 & \$ 13.80 \\\text { Selling and administrative } & \$ 4.00 & \$ 7.00 \\\text { Operating profit } & \$ 3.50 & \$ 6.80\end{array}$ 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?
-Under the revised ABC system,total overhead costs allocated to Sweatshirts will be ________.

• A) $ 48,720
• B) $ 76,720
• C) $224,920
• D) None of these answers are correct.

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Definitions:

Mediating Variable

A variable that helps explain the relationship between the independent and dependent variables, acting as an intermediary in the cause-effect relation.

Direct Correlation

A relationship between two variables in which both either increase or decrease together.

Variables

Factors or conditions that can vary or change within a research or experimental setup, affecting outcomes or results.