Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some of the itemsare manufactured by TCC, while others are purchased for resale. For the products it manufactures, the company currently bases itsselling prices on a product-costing system that accounts for direct material, direct labor, and the associated overhead costs. In additionto these product costs, TCC incurs substantial selling costs, and Roger Jackson, controller, has suggested that these selling costsshould be included in the product pricing structure.After studying the costs incurred over the past two years for one of its products, skeins of knitting yarn, Jackson has selected fourcategories of selling costs and chosen cost drivers for each of these costs. The selling costs actually incurred during the past year andthe cost drivers are as follows:Cost CategorySales commissionsPay-per-click/Search engine optimizationCost of online salesCredit and collectionTotal selling costsThe knitting yarn is sold to retail outlets in boxes, each containing 12 skeins of yarn. The sale of partial boxes is not permitted.Commissions are paid on sales to retail outlets but not on online sales. The cost of online sales includes technology infrastructurecosts and the wages of personnel who process the online orders. Jackson believes that the selling costs vary significantly with the sizeof the order. Order sizes are divided into three categories as follows:Order SizeSmallMediumLarge1 to 10Online Sales1 to 10 skeins11 to 20 skeinsOver 20 skeinsRetail Salesboxes11 to 20 boxesOver 20 boxesAn analysis of the previous year's records produced the following statistics.ItemsRetail sales boxes (12 skeins per box)Online sales, skeinsNumber of retail ordersNumber of online leadsSmall5,50095,000645246, 190Sales commissionsPay-per-click/Search engine optimizationCost of online salesCredit and collectionTotal cost for all orders of a given sizeUnits (skeins) soldUnit cost per order of a given sizeCost DriverAmount$ 537,000Boxes of yarn sold to retail storesNumbe of online leadsSkeins sold online345,900200,70097,200 Number of retail orders$ 1,180,800Required:1. Prepare a schedule showing TCC's total selling cost for each order size and the per-skein selling cost within each order size.Note: Round your intermediate calculations and unit cost per order to 2 decimal places.TEXTILE CRAFT COMPANYComputation of Selling CostsBy Order Size and Per Skein Within Each Order SizeSmall orders are preferable to medium sized orders.Order SizeMediumLarge orders are preferable to medium sized orders.69,00068,0003,215260,530SmallMarketing should be focused on small sized orders.Management may want to consider offering discounts for large orders.Large194,00060,0006,940185, 080MediumOrder SizeTotal268,500223,00010,800691,8000Large0 $Total2. An analysis of selling costs shows:Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correctanswer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a questionmark will be automatically graded as incorrect. Check my work is not available.000O0

Under activity based costing method, the cost is allocated to each activity based on its…

Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some of the items are manufactured by TCC, while others are purchased for resale. For the products it manufactures, the company currently bases its selling prices on a product-costing system that accounts for direct material, direct labor, and the associated overhead costs. In addition to these product costs, TCC incurs substantial selling costs, and Roger Jackson, controller, has suggested that these selling costs should be included in the product pricing structure. After studying the costs incurred over the past two years for one of its products, skeins of knitting yarn, Jackson has selected four categories of selling costs and chosen cost drivers for each of these costs. The selling costs actually incurred during the past year and the cost drivers are as follows: Cost Category Sales commissions Pay-per-click/Search engine optimization Cost of online sales. Credit and collection Total selling costs Cost Driver Amount $ 537,000 Boxes of yarn sold to retail stores 345,900 Number of online leads 200,700 Skeins sold online. 97,200 Number of retail orders $ 1,180,800 The knitting yarn is sold to retail outlets in boxes, each containing 12 skeins of yarn. The sale of partial boxes is not permitted. Commissions are paid on sales to retail outlets but not on online sales. The cost of online sales includes technology infrastructure costs and the wages of personnel who process the online orders. Jackson believes that the selling costs vary significantly with the size of the order. Order sizes are divided into three categories as follows:

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q