Tiger Pride Produces Two Product Lines: T-Shirts and Sweatshirts What Is the Projected Decline in Operating Income If the Is

question 72

Multiple Choice

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 the projected decline in operating income if the direct materials costs of T-Shirts increase to $3.50 per unit and direct labor costs of Sweatshirts increase to $13.00 per unit?

• A) $293,000
• B) $90,000
• C) $203,000
• D) $473,000

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Definitions:

Consistent

Showing steady conformity to a pattern, belief, or attitude over time.

Flooding Technique

A behavioral therapy method where an individual is exposed to their fear source without an actual threat in order to overcome that fear.

Tolerating Flooding

Tolerating Flooding refers to a therapeutic technique where individuals are exposed to a vast amount of the anxiety-inducing stimulus in order to diminish the fear response over time.

Acquisition Training

The process of learning new behaviors or knowledge, especially through reinforcement.