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 (29%), skirts (35%), dresses (14%), and other (22%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is £2.65 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 Couine 11,000 31.01 341, 110 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: £ 30,080 25,700 25,000 20 700 56,000 187,000 29, 150 272, 150 50,800 322,950 18, 160

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 (29%), skirts (35%), dresses (14%), and other (22%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is £2.65 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 Couine 11,000 31.01 341, 110 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: £ 30,080 25,700 25,000 20 700 56,000 187,000 29, 150 272, 150 50,800 322,950 18, 160

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 29E: Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima....

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