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An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in 4 separate boxes. What is the packing and shipping cost that will be allocated to the order? $18.60 $4.20 $12.60 $8.40 $16.80 0 0 0 0

An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in 4 separate boxes. What is the packing and shipping cost that will be allocated to the order? $18.60 $4.20 $12.60 $8.40 $16.80 0 0 0 0

FINANCIAL ACCOUNTING
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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An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in 4 separate boxes. What is the packing and shipping cost that will be allocated to the order? $18.60 $4.20 $12.60 $8.40 $16.80
ABC Co. implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping. ABC determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped The cost driver for this pool is the number of individual items that are inspected. The third cost pool is used for general operations of the department and the cost driver is the number of orders. Cost Pool Packaging & Shipping Inspection General Operations $67,200 $200,000 $85,000 Estimated Total Costs Cost Driver Number of boxes shipped Number items inspected Number of orders Estimated Annual Activity 16,000 boxes 100,000 items 10,000 orders
Transcribed Image Text:ABC Co. implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping. ABC determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped The cost driver for this pool is the number of individual items that are inspected. The third cost pool is used for general operations of the department and the cost driver is the number of orders. Cost Pool Packaging & Shipping Inspection General Operations $67,200 $200,000 $85,000 Estimated Total Costs Cost Driver Number of boxes shipped Number items inspected Number of orders Estimated Annual Activity 16,000 boxes 100,000 items 10,000 orders
An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in 4 separate boxes. What is the packing and shipping cost that will be allocated to the order? $18.60 $4.20 $12.60 $8.40 $16.80 0000
Transcribed Image Text:An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in 4 separate boxes. What is the packing and shipping cost that will be allocated to the order? $18.60 $4.20 $12.60 $8.40 $16.80 0000
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