A company's returns department incurs annual overhead costs of $90,000 and budgets 2,000 returns per year. Management believes it has found a better way to package its products. As a result, the company expects to reduce the number of shipments that are returned due to damage by 5%. This is expected to reduce the department's annual overhead by $20,000. Compute the department's standard overhead rate per return (a) before the sustainability improvement and (b) after the sustainability improvement. (Round your answers to 2 decimal places.)

A company's returns department incurs annual overhead costs of $90,000 and budgets 2,000 returns per year. Management believes it has found a better way to package its products. As a result, the company expects to reduce the number of shipments that are returned due to damage by 5%. This is expected to reduce the department's annual overhead by $20,000. Compute the department's standard overhead rate per return (a) before the sustainability improvement and (b) after the sustainability improvement. (Round your answers to 2 decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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