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 (32%), skirts (25%). dresses (13%), and other (30%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is £2.52 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 £ 34,860 30,000 29,300 12,000 28.48 33,400 22,500 10,000 5,400 10,800 341,760 56,200 187,600 30, 240 274,040 51,100 325, 140 16,620

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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 (32%), skirts (25%),
dresses (13%), and other (30%). Fleet Street has been using a volume-based rate to
assign overhead to each product; the rate it uses is £2.52 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
£ 34,860
30,000
29,300
33,400
22,500
10,000
Profit margin
12,000
28.48
5,400
10,800
341,760
56,200
187,600
30,240
274,040
51, 100
325, 140
16,620
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 (32%), skirts (25%), dresses (13%), and other (30%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is £2.52 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 £ 34,860 30,000 29,300 33,400 22,500 10,000 Profit margin 12,000 28.48 5,400 10,800 341,760 56,200 187,600 30,240 274,040 51, 100 325, 140 16,620 Required: 1. Determine the profit margin for trousers using ABC.
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