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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 (21%), skirts (23%), dresses (14%), and other (42%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is £2.82 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 Pattern cutting Grading Lay planning Sewing Finishing Inspection Boxing up Storage 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: 11,000 31.30 344, 300 56, 700 £ 36, 710 31, 600 30, 800 35, 100 23, 600 10, 400 5, 600 11, 200 Profit margin 189, 300 31, 020 277, 020 51, 600 328, 620 15, 680 Required: 1. Determine the profit margin for trousers using ABC.

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 (21%), skirts (23%), dresses (14%), and other (42%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is £2.82 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 Pattern cutting Grading Lay planning Sewing Finishing Inspection Boxing up Storage 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: 11,000 31.30 344, 300 56, 700 £ 36, 710 31, 600 30, 800 35, 100 23, 600 10, 400 5, 600 11, 200 Profit margin 189, 300 31, 020 277, 020 51, 600 328, 620 15, 680 Required: 1. Determine the profit margin for trousers using ABC.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
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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 (21%), skirts (23%), dresses (14%), and other (42%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is £2.82 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 Pattern cutting Grading 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: Lay planning Sewing Finishing Inspection Boxing up Storage £ 36, 710 31, 600 30, 800 35, 100 23, 600 Profit margin 11,000 31.30 344, 300 56, 700 189, 300 31, 020 10, 400 5, 600 11, 200 277, 020 51, 600 328, 620 15, 680 Required: 1. Determine the profit margin for trousers using ABC.
Transcribed Image Text: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 (21%), skirts (23%), dresses (14%), and other (42%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is £2.82 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 Pattern cutting Grading 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: Lay planning Sewing Finishing Inspection Boxing up Storage £ 36, 710 31, 600 30, 800 35, 100 23, 600 Profit margin 11,000 31.30 344, 300 56, 700 189, 300 31, 020 10, 400 5, 600 11, 200 277, 020 51, 600 328, 620 15, 680 Required: 1. Determine the profit margin for trousers using ABC.
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