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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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