Answer the Following Questions Using the Information Below:
Ghan Collectibles

Multiple Choice

Answer the following questions using the information below:
Ghan Collectibles produces T-shirts and sweatshirts.Product profitability is analysed as follows:
$\begin{array} { l r r } & \text { T-SHIRTS } & \text { SWEATSHIRTS } \\ \text { Production and sales volume } & 60000 \text { units } & 35000 \text { urits } \\ \text { Selling price } & \$ 16.00 & \$ 29.00 \\ \text { Direct material } & \$ 2.00 & \$ 5.00 \\ \text { Direct labour } & \$ 4.50 & \$ 7.20 \\ \text { Manufacturing overhead } & \$ 2.00 & \$ 3.00 \\ \text { Gross profit } & \$ 7.50 & \$ 13.80 \\ \text { Selling and administrative } & \$ 4.00 & \$ 7.00 \\ \text { Operating profit } & \$ 3.50 & \$ 6.80 \end{array}$

Ghan Collectibles's managers have decided to revise their current assignment of overhead costs to reflect the following $\mathrm { ABC }$ cost information:

$\begin{array}{c}\text { Activities demanded }\\\begin{array}{rr}\text { T-SHIRTS } & \text { SWEATSHIRTS } \\0.75 \mathrm{DLH} / \text { unit } & 1.2 \mathrm{DLH} / \mathrm{unit} \\45000 \mathrm{DLHs} & 42000 \mathrm{DLHs} \\60000 \text { inspections } & 17500 \text { inspections }\end{array}\end{array}$
-Using an ABC system,next year's estimates show manufacturing overhead costs will total $228 300 for 52 000 T-shirts.If all other T-shirt costs and sales prices remain the same,the profitability that can be expected is:

A) ($0.81) per T-shirt
B) $4.39 per T-shirt
C) $1.11 per T-shirt
D) $5.41 per T-shirt