Process costing: book order agencyAll Texts and Stationery Ltd (ATS) is a major provider of texts and stationery to secondary schools throughoutSouth Australia. Students submit their order to ATS through their school at the beginning of the year. All Textsand Stationery fills the order in three stages:(a) An order is received from the school and entered into the ATS inventory order system.(b) The books and stationery required to fill the order are taken from inventory, packed and dispatched tothe student.(c) Payment is received from the student and processed.The costs of these three processes in the year just ended are listed below:CostReceipt of orderPacking and dispatch of orderReceipt of payment$ 60 000$ 72 000Staff salaries$150 000Equipment depreciation504 000174 000288 000Equipment insurance96 00066 00096 000Telephone4 8003 6002 400Data processing9 0002 40014 400Postage186 000Consumables3 60042 0002 400During the year, ATs processed 22 000 student orders.Required:1. Calculate the cost per order for each process.2. Calculate the total cost per order.3. Why wouldn't the total cost per order provide a reliable estimate of the costs incurred to process eachorder? Explain your answer by outlining factors that may affect the cost of an individual order.Flow of costs: travel agency and retailerIn this chapter, the income statement of Adelaide Bank (Exhibit 6.13) is typical of many service firms' statements, inthat operating profit (consisting of the difference between operating revenue and operating expenses) is separatedfrom other (non-operating) items. However, the income statement of a retailer (Exhibit 6.14) more closely resemblesthat of a manufacturing organisation, as the need to consider the cost of sales causes us to recognise the directprofits of selling merchandise (gross profit) separately from the financial effects of other activities.Required:Refer to Exhibits 6.13 and 6.14 and answer the following questions.1. List the major differences between the income statements and balance sheets for a travel agency and adepartment store.2. On the income statement for the travel agency, where would the sales staff salaries be shown?3. Where would the costs of the computer equipment used to keep track of reservations be included in theincome statement for the travel agency?4. Where would the costs of advertising be shown in the income statements for the department store and thetravel agency?5. Where would the cost of merchandise be shown in the department store's income statement and balance sheet?6. Where would the costs of stationery used to print travel itineraries be shown on the travel agency's incomestatement and balance sheet?

Name: Process costing: book order agencyAll Texts and Stationery Ltd (ATS)
Uploaded: 2024-03-20T06:32:49.000Z
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Description: Process costing: book order agencyAll Texts and Stationery Ltd (ATS) is a major provider of texts and stationery to secondary schools throughoutSouth Australia. Students submit their order to ATS through their school at the beginning of the year. Al