Ritz Company sells fine collectible statues and has 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 and Rand has 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 and the cost driver for this pool is the number of individual items that are inspected and shipped. The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the department is summarized below: Cost Pool             Total Costs             Cost Driver             Annual Activity Packaging and       $167,300           Number of boxes       21,800 boxes   Shipping                                               shipped Final Inspection     $201,300          Number of individual    98,100 items                                                         items shipped General operations     $82,800       Number of orders          9,400 orders and supervision During the period, the Far East sales office generated 669 orders for a total of 6,060 items. These orders were shipped in 1,359 boxes. What amount of shipping department costs should be allocated to these sales?

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Ritz Company sells fine collectible statues and has 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 and Rand has 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 and the cost driver for this pool is the number of individual items that are inspected and shipped. The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the department is summarized below:

Cost Pool             Total Costs             Cost Driver             Annual Activity

Packaging and       $167,300           Number of boxes       21,800 boxes

  Shipping                                               shipped

Final Inspection     $201,300          Number of individual    98,100 items

                                                        items shipped

General operations     $82,800       Number of orders          9,400 orders

and supervision

During the period, the Far East sales office generated 669 orders for a total of 6,060 items. These orders were shipped in 1,359 boxes. What amount of shipping department costs should be allocated to these sales?

 

 

 

 

 

 

 

 

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