Fleet Street Incorporated a manufacturer of high-fashion clothing for women, is located in South London in...

 

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Fleet Street Incorporated a manufacturer of high-fashion clothing for women, is located in South London in the UK. Its product line consists of trousers (33%), skirts (26%), dresses (10%), and other (31%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is 2.19 per unit produced. The results for the trousers line, using the volume-based approach, are as follows: Number of units produced Price (all figures in ) Total revenue Direct materials Direct labor Overhead (volume-based) Total product cost Nonmanufacturing expenses Total cost Profit margin for trousers 13,000 25.19 327,470 53,900 179,900 28,470 262,270 49,000 311,270 16,200 Recently, Fleet Street conducted a further analysis of the trousers line of product, using ABC. In the study, eight activities were identified, and direct labor was assigned to the activities. The total conversion cost (labor and overhead) for the eight activities, after allocation to the trousers line, is as follows: Pattern cutting Grading Lay planning Sewing Finishing Inspection Boxing up Storage Required: 36,640 31,200 30,300 34,800 23,000 10,300 5,800 11,600 1. Determine the profit margin for trousers using ABC. Answer is complete but not entirely correct. Profit margin 143,630 Fleet Street Incorporated a manufacturer of high-fashion clothing for women, is located in South London in the UK. Its product line consists of trousers (33%), skirts (26%), dresses (10%), and other (31%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is 2.19 per unit produced. The results for the trousers line, using the volume-based approach, are as follows: Number of units produced Price (all figures in ) Total revenue Direct materials Direct labor Overhead (volume-based) Total product cost Nonmanufacturing expenses Total cost Profit margin for trousers 13,000 25.19 327,470 53,900 179,900 28,470 262,270 49,000 311,270 16,200 Recently, Fleet Street conducted a further analysis of the trousers line of product, using ABC. In the study, eight activities were identified, and direct labor was assigned to the activities. The total conversion cost (labor and overhead) for the eight activities, after allocation to the trousers line, is as follows: Pattern cutting Grading Lay planning Sewing Finishing Inspection Boxing up Storage Required: 36,640 31,200 30,300 34,800 23,000 10,300 5,800 11,600 1. Determine the profit margin for trousers using ABC. Answer is complete but not entirely correct. Profit margin 143,630