Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through...

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Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales

business accounting

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Answer 1

Answer #1

Selling cost to be assigned:

Traditional product costing = $399,000 * 70% = $279,300

Activity based costing :

Sales commissions ($916,000*$0.05)	$45,800
Advertising - TV (270*$300)	81,000
Advertising - internet (2,000*$10)	20,000
Catalogs (60,600*$2.50)	151,500
Cost of catalog sales (9,500*$1)	9,500
Credit and collection ($916,000*$0.03)	27,480
Selling cost	$335,280

Traditional costing system undercost the high intensity product line by $55,980 ($335,280-279,300)

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Answer 2

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