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 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 Small Medium Large Cost Driver Amount $ 829,500 Boxes of yarn sold to retail stores 313,000 Number of online leads 149,600 Skeins sold online 79,200 Number of retail orders $ 1,371,300 Online Sales 1 to 10 skeins 11 to 20 skeins Over 20 skeins Retail Sales boxes 1 to 10 11 to 20 boxes Over 20 boxes An analysis of the previous year's records produced the following statistics.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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create a schedule showing TCC’s total selling cost for each order size and the per-skein selling cost within each order size

 

**Textile Crafts Company (TCC) Overview**

Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some items are manufactured by TCC, while others are purchased for resale. TCC bases its product pricing on a costing system that includes direct material, labor, overhead costs, and substantial selling costs. Roger Jackson, the controller, suggests that selling costs should be factored into pricing.

**Cost Analysis for Knitting Yarn**

Over the past two years, TCC studied the costs of selling skeins of knitting yarn. Jackson identified four cost categories and their respective cost drivers, summarized below:

| **Cost Category**                            | **Amount** | **Cost Driver**                            |
|----------------------------------------------|------------|--------------------------------------------|
| Sales commissions                            | $829,500   | Boxes of yarn sold to retail stores        |
| Pay-per-click/Search engine optimization     | $313,000   | Number of online leads                     |
| Cost of online sales                         | $149,600   | Skeins sold online                         |
| Credit and collection                        | $79,200    | Number of retail orders                    |
| **Total selling costs**                      | **$1,371,300** |                                            |

**Ordering and Selling Details**

- Knitting yarn is sold in boxes (12 skeins each) to retail outlets. Partial box sales are not permitted.
- Commissions apply to sales to retail outlets but not online.
- Online sales costs include technology and personnel wages.
- Selling costs differ by order size, categorized 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       |

**Statistics from Previous Year**

An analysis provided the following statistics regarding sales and cost distribution.

(Note: Ensure any diagrams or graphs depicting this data are accessible and comprehensible for educational use, with clear labels and legends to explain any visual data representations.)
Transcribed Image Text:**Textile Crafts Company (TCC) Overview** Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some items are manufactured by TCC, while others are purchased for resale. TCC bases its product pricing on a costing system that includes direct material, labor, overhead costs, and substantial selling costs. Roger Jackson, the controller, suggests that selling costs should be factored into pricing. **Cost Analysis for Knitting Yarn** Over the past two years, TCC studied the costs of selling skeins of knitting yarn. Jackson identified four cost categories and their respective cost drivers, summarized below: | **Cost Category** | **Amount** | **Cost Driver** | |----------------------------------------------|------------|--------------------------------------------| | Sales commissions | $829,500 | Boxes of yarn sold to retail stores | | Pay-per-click/Search engine optimization | $313,000 | Number of online leads | | Cost of online sales | $149,600 | Skeins sold online | | Credit and collection | $79,200 | Number of retail orders | | **Total selling costs** | **$1,371,300** | | **Ordering and Selling Details** - Knitting yarn is sold in boxes (12 skeins each) to retail outlets. Partial box sales are not permitted. - Commissions apply to sales to retail outlets but not online. - Online sales costs include technology and personnel wages. - Selling costs differ by order size, categorized 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 | **Statistics from Previous Year** An analysis provided the following statistics regarding sales and cost distribution. (Note: Ensure any diagrams or graphs depicting this data are accessible and comprehensible for educational use, with clear labels and legends to explain any visual data representations.)
**Order Size Overview:**

| Items                         | Small  | Medium  | Large  | Total     |
|-------------------------------|--------|---------|--------|-----------|
| Retail sales boxes (12 skeins per box) | 4,000  | 51,000  | 182,000 | 237,000   |
| Online sales, skeins          | 83,000 | 56,000  | 48,000 | 187,000   |
| Number of retail orders       | 525    | 2,615   | 4,060  | 7,200     |
| Number of online leads        | 273,050| 230,670 | 122,280| 626,000   |

**Required:**

1. **Objective:**
   Prepare a schedule showing Textile Craft Company’s (TCC) 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 COMPANY**

*Computation of Selling Costs*

- **By Order Size and Per Skein Within Each Order Size**

  |                        | Order Size         |                |                |                |  
  |------------------------|--------------------|----------------|----------------|----------------|
  |                        | **Small**          | **Medium**     | **Large**      | **Total**      |
  | Sales commissions      |                    |                |                |  $0            |
  | Pay-per-click/Search engine optimization |  |                |                |  0             |
  | Cost of online sales   |                    |                |                |  0             |
  | Credit and collection  |                    |                |                |  0             |
  | **Total cost for all orders of a given size** |     $0          |      $0       |     $0         |  $0            |
  | Units (skeins) sold    |                    |                |                |                |
  | Unit cost per order of a given size |      |                |                |                |

This educational schedule helps calculate and understand the selling costs associated with different order sizes, allowing businesses to optimize their pricing and marketing strategies.
Transcribed Image Text:**Order Size Overview:** | Items | Small | Medium | Large | Total | |-------------------------------|--------|---------|--------|-----------| | Retail sales boxes (12 skeins per box) | 4,000 | 51,000 | 182,000 | 237,000 | | Online sales, skeins | 83,000 | 56,000 | 48,000 | 187,000 | | Number of retail orders | 525 | 2,615 | 4,060 | 7,200 | | Number of online leads | 273,050| 230,670 | 122,280| 626,000 | **Required:** 1. **Objective:** Prepare a schedule showing Textile Craft Company’s (TCC) 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 COMPANY** *Computation of Selling Costs* - **By Order Size and Per Skein Within Each Order Size** | | Order Size | | | | |------------------------|--------------------|----------------|----------------|----------------| | | **Small** | **Medium** | **Large** | **Total** | | Sales commissions | | | | $0 | | Pay-per-click/Search engine optimization | | | | 0 | | Cost of online sales | | | | 0 | | Credit and collection | | | | 0 | | **Total cost for all orders of a given size** | $0 | $0 | $0 | $0 | | Units (skeins) sold | | | | | | Unit cost per order of a given size | | | | | This educational schedule helps calculate and understand the selling costs associated with different order sizes, allowing businesses to optimize their pricing and marketing strategies.
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