ABC; product profitability

overhead, $$320,000$ is utilities related and the remainder is primarily related to quality control inspectors' salaries. The following information about the products is also available.

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: $9$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 $$800,000$ of overhead costs to both types of gloves based on machine hours. Of the overhead, $$320,000$ 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 $2,000,0001,400,000$

Machine hours $170,00030,000$

Inspection hours $10,00050,000$

Revenues $$2,560,000$ $$2,240,000$

Direct costs $$2,000,000$ $$1,760,000$

a$.$ Determine the total overhead cost assigned to each type of gloves using the current allocation system.

Total OH assigned to regular gloves: $Answer $1$

Total OH assigned to fleece$-$lined gloves: $Answer $2$

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: $Answer $3$

Total OH assigned to fleece$-$lined gloves: $Answer $4$

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: $Answer $5$

Profit before tax for fleece$-$lined gloves: $Answer $6$