ABC; product profitability Outerwear Inc. is concerned about the profitability of its regular gloves. Company managers...

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ABC; product profitability Outerwear Inc. is concerned about the profitability of its regular gloves. Company managers are considering producing only the top-quality, fleece lined, gloves. The company is currently assigning the $2,000,000 of overhead costs to both types of gloves based on machine hours. Of the overhead, $800,000 is utilities related and the remainder is primarily related to quality control inspectors' salaries. The following information about the products is also available. Regular Fleece-Lined Number produced 2,000,000 1,400,000 Machine hours Inspection hours 170,000 30,000 10,000 $6,400,000 $5,000,000 50,000 $5,600,000 $4,400,000 Revenues Direct costs a. Determine the total overhead cost assigned to each type of gloves using the current allocation system. Total OH assigned to regular gloves: $ Total OH assigned to fleece-lined gloves: $ b. Determine the total overhead cost assigned to each type of gloves if more appropriate cost drivers were used. Total OH assigned to regular gloves: $ Total OH assigned to fleece-lined gloves: $ c. Determine the profit before tax for regular and fleece-lined gloves based on the overhead cost assignment in part (b). Profit before tax for regular gloves: $ Profit before tax for fleece-lined gloves: $ Check ABC; product profitability Outerwear Inc. is concerned about the profitability of its regular gloves. Company managers are considering producing only the top-quality, fleece lined, gloves. The company is currently assigning the $2,000,000 of overhead costs to both types of gloves based on machine hours. Of the overhead, $800,000 is utilities related and the remainder is primarily related to quality control inspectors' salaries. The following information about the products is also available. Regular Fleece-Lined Number produced 2,000,000 1,400,000 Machine hours Inspection hours 170,000 30,000 10,000 $6,400,000 $5,000,000 50,000 $5,600,000 $4,400,000 Revenues Direct costs a. Determine the total overhead cost assigned to each type of gloves using the current allocation system. Total OH assigned to regular gloves: $ Total OH assigned to fleece-lined gloves: $ b. Determine the total overhead cost assigned to each type of gloves if more appropriate cost drivers were used. Total OH assigned to regular gloves: $ Total OH assigned to fleece-lined gloves: $ c. Determine the profit before tax for regular and fleece-lined gloves based on the overhead cost assignment in part (b). Profit before tax for regular gloves: $ Profit before tax for fleece-lined gloves: $ Check

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ANSWER a Total overhead cost assigned to each type of gloves using the current allocation system Reg... View the full answer