Answer the Following Questions Using the Information Below:
Tiger Pride

question 158

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,overhead costs per unit for the Sweatshirts will be ________.

• A) $1.39 per unit
• B) $1.60 per unit
• C) $2.19 per unit
• D) $2.47 per unit

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Definitions:

Wages

Wages are the payments made to labor for their services, typically calculated on an hourly, daily, or piecework basis, and are a primary form of income for employees.

Rules of Thumb

General principles that provide practical instructions or guidelines, typically based on experience rather than theory.

Complex Decisions

Decisions that involve multiple factors, variables, or outcomes, often requiring significant judgement and analysis to resolve.

Market System

Refers to the network of buyers, sellers, and other actors that come together to trade in a given product or service.