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 Amount Cost Driver Sales commissions $ 462,000 Boxes of yarn sold to retail stores Pay-per-click/Search engine optimization 323,180 Number of online leads Cost of online sales 108,600 Skeins sold online Credit and collection 72,600 Number of retail orders Total selling costs $ 966,380 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: Order Size Online Sales Retail Sales Small 1 to 10 skeins 1 to 10 boxes Medium 11 to 20 skeins 11 to 20 boxes Large Over 20 skeins Over 20 boxes An analysis of the previous year’s records produced the following statistics. Items Order Size Total Small Medium Large Retail sales boxes (12 skeins per box) 3,000 48,000 180,000 231,000 Online sales, skeins 81,000 54,000 46,000 181,000 Number of retail orders 505 2,515 3,580 6,600 Number of online leads 230,690 254,870 160,800 646,360 Required: 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. 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 correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect. Check my work is not available. check all that apply Management may want to consider offering discounts for large orders. Small orders are preferable to medium sized orders. Large orders are preferable to medium sized orders. Marketing should be focused on small sized orders.

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 Amount Cost Driver Sales commissions $ 462,000 Boxes of yarn sold to retail stores Pay-per-click/Search engine optimization 323,180 Number of online leads Cost of online sales 108,600 Skeins sold online Credit and collection 72,600 Number of retail orders Total selling costs $ 966,380 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: Order Size Online Sales Retail Sales Small 1 to 10 skeins 1 to 10 boxes Medium 11 to 20 skeins 11 to 20 boxes Large Over 20 skeins Over 20 boxes An analysis of the previous year’s records produced the following statistics. Items Order Size Total Small Medium Large Retail sales boxes (12 skeins per box) 3,000 48,000 180,000 231,000 Online sales, skeins 81,000 54,000 46,000 181,000 Number of retail orders 505 2,515 3,580 6,600 Number of online leads 230,690 254,870 160,800 646,360 Required: 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. 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 correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect. Check my work is not available. check all that apply Management may want to consider offering discounts for large orders. Small orders are preferable to medium sized orders. Large orders are preferable to medium sized orders. Marketing should be focused on small sized orders.

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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Cost Category	Amount	Cost Driver
Sales commissions	$ 462,000	Boxes of yarn sold to retail stores
Pay-per-click/Search engine optimization	323,180	Number of online leads
Cost of online sales	108,600	Skeins sold online
Credit and collection	72,600	Number of retail orders
Total selling costs	$ 966,380

Order Size	Online Sales	Retail Sales
Small	1 to 10	skeins	1 to 10	boxes
Medium	11 to 20	skeins	11 to 20	boxes
Large	Over 20	skeins	Over 20	boxes

Items	Order Size	Total
Retail sales boxes (12 skeins per box)	3,000	48,000	180,000	231,000
Online sales, skeins	81,000	54,000	46,000	181,000
Number of retail orders	505	2,515	3,580	6,600
Number of online leads	230,690	254,870	160,800	646,360

Required:

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.
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 correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect. Check my work is not available.

check all that apply
- Management may want to consider offering discounts for large orders.
- Small orders are preferable to medium sized orders.
- Large orders are preferable to medium sized orders.
- Marketing should be focused on small sized orders.

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