Chapter 5 Activity-Based Costing and Management After studying the costs incurred over the past two years for one of its products, skeins lackson has selected four categories of selling costs and chosen cost d selling costs actually incurred during the past year and the cost drivers are as follows: of knitine drivers for each of these The Amount Cost Driver Cost Category $ 675,000 Boxes of yarn soild to retal stores 295.400 Catalogs distributed 105,000 Skeins sold through catalog Sales commissions Cost of catalog sales 60,000 Number of retail orders Credt and collection $1.135.400 Total selling costs The knitting yarn is sold to retail outlets in boxes, each containing 12 skeins of yarn. The sale of l boxes is not permitted. Commissions are paid on sales to retail outlets but not on catalog sales. The cost of catalog sales includes telephone costs and the wages of personnel who take the catalog orders. Jackson believes that the selling costs vary significantly with the size of the order. Order sizes are divided into three categories as follows: Catalog Sales Retail Sales Order Size 1-10 boxes 1-10 skeins Smal 11-20 skeins 11-20 boxes Medium Over 20 skeins Over 20 boxes Large An analysis of the previous year's records produced the following statistics. Order Size Total Large SmallMedium 225,000 45,000178,000 2,000 Retail sales in boxes (12 skeins per box) 175,000 52,00044,000 79,000 Catalog sales in skeins 6,000 3,100 2.415 485 Number of retail orders Catalogs distributed 254.300 211,300 125,200590.800 Required: 1. Prepare a schedule showing Redwood Company's total selling cost for each order size and the per- skein selling cost within each order size. 2. Explain how the analysis of the selling costs for skeins of knitting yarn is likely to impact future pricing and product decisions at Redwood Company CMA, adapted)
Homework Answers
Calculation of Cost per Quantity of Cost Driver
| Cost Category | Cost | Cost Driver | Qty of Cost Driver | Cost per Qty Driver |
| Sales Commission | 675000 | Boxes of Yarn Sold to retail stores | 225000 | 3.00 |
| Catalogues | 295400 | Catalogs Distibuted | 590800 | 0.50 |
| Cost of Catalogs Sales | 105000 | Skeins sold through catalogs | 175000 | 0.60 |
| Credit & Collection | 60000 | Number of retail orders | 6000 | 10.00 |
Schedule showing Selling Cost for each order type & Calculation of per skein selling cost under each order size:
| Small | Medium | Large | Total | |
| Sales Commission (Retail) | 6,000 | 1,35,000 | 5,34,000 | 6,75,000 |
| Catalogues | 1,27,150 | 1,05,650 | 62,600 | 2,95,400 |
| Cost of Catalogs Sales | 47,400 | 31,200 | 26,400 | 1,05,000 |
| Credit & Collection (Retail) | 4,850 | 24,150 | 31,000 | 60,000 |
| 1,85,400 | 2,96,000 | 6,54,000 | 11,35,400 | |
| Total Skeins Sold | 103000 | 592000 | 2180000 | 28,75,000 |
| Selling cost per skein | 1.80 | 0.50 | 0.30 |
Working :
Calculation of Total Skeins sold
| Retail | Catalogs | Total | |
| Small | 24000 | 79000 | 103000 |
| Medium | 540000 | 52000 | 592000 |
| Large | 2136000 | 44000 | 2180000 |
Based on the analysis of selling cost based on different order sizes, the company will be able to arrive at correct pricing for each type of order size based on allocation of selling cost as per Activity Based Costing.
Add Answer to:
Uni Utilities (equipment Overtime (hourly) Unit Unit Unit Rework Shift differential Spoilage Required: Choose two...
Required: 1. Prepare a schedule showing Redwood Company's total selling cost for each order size and...
Required: 1. Prepare a schedule showing Redwood Company's total selling cost for each order size and the per-skein selling cost within each order size. (Round your intermediate calculations and unit cost per order to 2 decimal places.) Redwood Company sells craft kits and supplies to retail outlets and through its catalog. Some of the items are manufactured by Redwood, while others are purchased for resale. For the products it manufactures, the company currently bases its selling prices on product-costing system...
sed IS USU S c. Write a memorandum to the president of Air United explaining the...
sed IS USU S c. Write a memorandum to the president of Air United explaining the benefits of activity-based costing E17.10 (LO 1. 2. 3) Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to...
E17.10 Assign overhead using traditional costing and ABC. (LO 1, 2, 3), AP Kragan Clothing Company...
E17.10 Assign overhead using traditional costing and ABC. (LO 1, 2, 3), AP Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs....
Exercise 4-10 (Video) (Part Level Submission) Kragan Clothing Company manufactures its own designed and labeled athletic...
Exercise 4-10 (Video) (Part Level Submission) Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs. Its direct materials costs for the month...
Exercise 17-10 Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its...
Exercise 17-10 Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs. Its direct materials costs for the month of March for Kragan's...
Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through...
Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs. Its direct materials costs for the month of March for Kragan's "high-intensity line...
Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through...
Kragan Clothing Company manufactures its own designed and
labeled athletic wear and sells its products through catalog sales
and retail outlets. While Kragan has for years used activity-based
costing in its manufacturing activities, it has always used
traditional costing in assigning its selling costs to its product
lines. Selling costs have traditionally been assigned to Kragan’s
product lines at a rate of 70% of direct materials costs. Its
direct materials costs for the month of March for Kragan’s
“high-intensity” line...
overhead sing onal costing and ABC 3 AP E17.10 Kragan Clothing Company manufactures its own designed...
overhead sing onal costing and ABC 3 AP E17.10 Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selline costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs. Its direct materials costs...
Activity-Based Customer Costing Dormirbien Company produces mattresses for 20 retail outlets. Of the 20 retail outlets,...
Activity-Based Customer Costing Dormirbien Company produces
mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are
small, separately owned furniture stores and one is a retail chain.
The retail chain buys 60% of the mattresses produced. The 19
smaller customers purchase mattresses in approximately equal
quantities, where the orders are about the same size. Data
concerning Dormirbien's customer activity are as follows:
Required:
Assign costs to customers by using an ABC approach. Round
activity rates to at least...
Activity-Based Customer Costing Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets,...
Activity-Based Customer Costing Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a retail chain. The retail chain buys 60% of the mattresses produced. The 19 smaller customers purchase mattresses in approximately equal quantities, where the orders are about the same size. Data concerning Sleepeze's customer activity are as follows: Large Retailer Smaller Retailers 72,000 Units purchased 108,000 Orders placed 3,600 Number of sales calls 882...
Required: 1. Prepare a schedule showing Redwood Company's total selling cost for each order size and the per-skein selling cost within each order size. (Round your intermediate calculations and unit cost per order to 2 decimal places.) Redwood Company sells craft kits and supplies to retail outlets and through its catalog. Some of the items are manufactured by Redwood, while others are purchased for resale. For the products it manufactures, the company currently bases its selling prices on product-costing system...
sed IS USU S c. Write a memorandum to the president of Air United explaining the benefits of activity-based costing E17.10 (LO 1. 2. 3) Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to...
E17.10 Assign overhead using traditional costing and ABC. (LO 1, 2, 3), AP Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs....
Exercise 4-10 (Video) (Part Level Submission) Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs. Its direct materials costs for the month...
Exercise 17-10 Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs. Its direct materials costs for the month of March for Kragan's...
Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs. Its direct materials costs for the month of March for Kragan's "high-intensity line...
Kragan Clothing Company manufactures its own designed and
labeled athletic wear and sells its products through catalog sales
and retail outlets. While Kragan has for years used activity-based
costing in its manufacturing activities, it has always used
traditional costing in assigning its selling costs to its product
lines. Selling costs have traditionally been assigned to Kragan’s
product lines at a rate of 70% of direct materials costs. Its
direct materials costs for the month of March for Kragan’s
“high-intensity” line...
overhead sing onal costing and ABC 3 AP E17.10 Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selline costs to its product lines. Selling costs have traditionally been assigned to Kragan's product lines at a rate of 70% of direct materials costs. Its direct materials costs...
Activity-Based Customer Costing Dormirbien Company produces
mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are
small, separately owned furniture stores and one is a retail chain.
The retail chain buys 60% of the mattresses produced. The 19
smaller customers purchase mattresses in approximately equal
quantities, where the orders are about the same size. Data
concerning Dormirbien's customer activity are as follows:
Required:
Assign costs to customers by using an ABC approach. Round
activity rates to at least...
Activity-Based Customer Costing Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a retail chain. The retail chain buys 60% of the mattresses produced. The 19 smaller customers purchase mattresses in approximately equal quantities, where the orders are about the same size. Data concerning Sleepeze's customer activity are as follows: Large Retailer Smaller Retailers 72,000 Units purchased 108,000 Orders placed 3,600 Number of sales calls 882...
Most questions answered within 3 hours.
-
Assume that capital markets are competitive and that the
international Fisher hypothesis holds. The one-year interest...
asked 18 minutes ago -
Solid potassium phosphate is slowly added to 150 mL of a 0.0518
M calcium nitrate solution....
asked 32 minutes ago -
(CO 2) A field can be added to a report to
values for two or more...
asked 2 hours ago -
Identify 3 research scenarios that might provide a low,
medium, and high degree of variability in...
asked 2 hours ago -
how
does gravity affect the trajectory of projectile? what would be the
shape of the trajactory...
asked 3 hours ago -
Two small plastic spheres are given positive electrical charges.
When they are a distance of 15.4...
asked 3 hours ago -
An acidic solution containing gold ions is
electrolyzed, producing gaseous oxygen (from water) at the anode...
asked 3 hours ago -
Assume that the population of Mexico is 128
million and that the population increases 1.01
percentannually....
asked 4 hours ago -
Can someone please help me add appropriate descriptive
comments to each line of code in the...
asked 5 hours ago -
Romeo wishes to throw a bouquet of flowers to Juliet, who is on
a second-story balcony,...
asked 6 hours ago -
Why is QE a controversial monetary policy tool.
A. It may lead to excessive inflation.B. By...
asked 6 hours ago -
Principles of Programming midterm study guide help!
1.)
______ Which of the following would reference the...
asked 5 hours ago