An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in 4 separate boxes. What is the packing and shipping cost that will be allocated to the order?$18.60$4.20$12.60$8.40$16.80 ABC Co. implemented activity-based costing. Costs in the shipping department have been divided intothree cost pools.The first cost pool contains costs that are related to packaging and shipping. ABC determined that thenumber 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 shippedThe cost driver for this pool is the number of individual items that are inspected.The third cost pool is used for general operations of the department and the cost driver is the number oforders.Cost PoolPackaging & ShippingInspectionGeneral Operations$67,200$200,000$85,000Estimated Total CostsCost DriverNumber of boxesshippedNumber itemsinspectedNumber ofordersEstimatedAnnual Activity16,000 boxes100,000 items10,000 orders An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in4 separate boxes. What is the packing and shipping cost that will be allocated to the order?$18.60$4.20$12.60$8.40$16.800000

Activity rate is the rate used to allocate manufacturing overhead cost to cost object under…

An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in 4 separate boxes. What is the packing and shipping cost that will be allocated to the order? $18.60 $4.20 $12.60 $8.40 $16.80 0 0 0 0

An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in 4 separate boxes. What is the packing and shipping cost that will be allocated to the order? $18.60 $4.20 $12.60 $8.40 $16.80 0 0 0 0

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 10MC: What is the proper order of tasks In an ABC system? identify the cost drivers, assign the costs to...

See similar textbooks

Related questions

Q: Exercise 4-26 (Algorithmic) (LO. 4) Determine the taxable amount of Social Security benefits for the…

A: Social Security benefits are government-administered financial assistance programs designed to…

Q: RSTN Company produces its product in two sequential processing departments. During October, the…

A: The equivalent units are calculated on the basis of the percentage of the work completed during the…

Q: Sandhill Company sells land with a book value of $165625 to Teal Mountain Corp. in exchange for a…

A: Zero coupon bonds are those which don't pay any interest during their lifetime. The bond value gets…

Q: The following are selected account balances of Rule Corporation at the end of the current year:…

A: INCOME STATEMENTIncome Statement is one of the Important Financial Statements of the Company. Income…

Q: The preliminary 2021 income statement of Alexian Systems, Inc., is presented below. ALEXIAN SYSTEMS,…

A: An income statement stands for the statement that shows profits and loss of the firm, its revenue…

Q: use for the cement. The inventory of cement could be sold for R70 per kg. The current purchase price…

A: A relevant cost, also referred to as a differential cost, is the avoidable cost that is calculated…

Q: Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense…

A: Conribution margin per unit Contribution margin ratio

Q: Business J operates in a jurisdiction that levies an income tax with the following rate structure:…

A: Income tax liability is the amount of tax that an individual or entity owes to the government based…

Q: b) Compute the number of equivalent units of production for both direct materials and conversion for…

A: Equivalent units means where the some goods remain incomplete at the end of process and we need to…

Q: Sparky Corporation uses the weighted-average method of process costing. The following information is…

A: Conversion costs are the costs incurred to convert raw material into finished goods. It includes the…

Q: The Sanding Department of Quik Furniture Company has the following production and manufacturing cost…

A: The equivalent units are calculated on the basis of the percentage of the work completed during the…

Q: Diego Company manufactures one product that is sold for $81 per unit in two geographic regions—the…

A: The break-even point in business refers to the level of sales or operations at which a company's…

Q: Rooney Manufacturing produces two keyboards, one for laptop computers and the other for desktop…

A: ABC costing means activity-based costing. It can be used by service, manufacturing, or retailing…

Q: Transactions for buyer and seller Shore Co. sold merchandise to Blue Star Co, on account, $111,000,…

A: JOURNAL ENTRIESJournal Entry is the first stage of Accounting Process. Journal Entry is the Process…

Q: In May, Seville Chemicals produced 26,000 barrels of the additive. Labor costs were $16,400, and…

A: Total manufacturing cost is the total cost incurred in the manufacturing of product during the…

Q: R. Burke Trial Balance as at 31 December 2019 Gross profit Accumulated depreciation on office…

A: Income statement means the statement which show the net income after deducting all expenses from…

Q: Georgeland Cycles makes and sells two models of electric bicycles. The Commuter (a folding model)…

A: Break even point :— It is the point of production where total cost is equal to total revenue. At…

Q: Yolo Windows, a manufacturer of windows for commercial buildings, reports the following account…

A: SCHEDULE OF COST OF GOODS MANUFACTUREDSchedule Of Cost Of Goods Manufactured are those costs which…

Q: 4. Prepare an income statement for the year and a balance sheet as of December 31. Hint: Retained…

A: Factory overhead It is the costs incurred during the manufacturing process and it is not including…

Q: What are the functions of the Lusaka Stock exchange?

A: Lusaka Stock Exchange: This stock exchange is often defined as the principal or main stock exchange…

Q: Puzzle Company assembles puzzles for boutiques along the coast of Maine. Management estimates that…

A: PREDETERMINED OVERHEAD RATEPredetermined rate means the indirect cost rate.Predetermined overhead…

Q: your answers to 2 decimal places, e.g., S 10 8 15 S Interest Rate 14 % 8% 13 % Future Value

A: Future Value is an value at a future date based on assumed rate of growth .It is caluclated as…

Q: Biscayne's Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information…

A: Break even point :— It is the point of production where total cost is equal to total revenue. At…

Q: QUESTION S Entity A is preparing its financial statements for the year ended 30 September 2023. The…

A: Under HKAS 37 (International Financial Reporting Standards), when a company is facing legal claims,…

Q: True or False: Residual risk is the risk that exists once risk responses have been implemented in an…

A: Residual risk is the remaining level of risk that exists after all risk management efforts,…

Q: Spiffy Shades Corporation manufactures artistic frames for sunglasses. Talia Demarest, controller,…

A: Budgets are the plan of spending the money and it involves the estimation of income and expenses of…

Q: Which of the following equations is correct? Multiple Choice Asset Liabilities-Shareholders' Equity…

A: Accounting equation is the equation that shows relationship between assets, liabilities and…

Q: On June 30, 2023, Wisconsin, Incorporated, issued $108,650 in debt and 24,200 new shares of its $10…

A: Consolidation is a financial and accounting process that combines the financial statements and…

Q: Compute the inventory turnover for 2025. (Round answer to 1 decimal place, e.g. 5.1.) Inventory…

A: Direct Materials refers to the raw materials used to manufacture a product. Normally all the direct…

Q: For example, in cell B13 enter the formula "= B5". After entering formulas in all of the cells that…

A: Cost volume profit analysis is the technique used by management for decision making. The methods…

Q: On January 1, 2025, Blossom Co. issued ten-year bonds with a face amount of $3500000 and a stated…

A: Investors buy bonds as a way to generate income and preserve capital. Bondholders receive regular…

Q: On February 15, Jewel Company buys 6,900 shares of Marcelo Corporation at $28.64 per share. The…

A: An investment typically refers to the allocation of money or resources with the expectation of…

Q: Dengo Company makes a trail mix in two departments: Roasting and Blending. Direct materials are…

A: Direct materials refers to the tangible components that make up a product. Cost accounting uses the…

Q: 4. Calculate the cost of goods transferred to Welding at the end of the month. In your calculations,…

A: Equivalent units under the FIFO method of process costing are the number of finished units that…

Q: Brady Construction Company contracted to build an apartment complex for a price of $5,400,000.…

A: Gross profit is the amount of money a company keeps after deducting all of the expenses incurred in…

Q: dy Cumby is the sole owner of Crane, a public camping ground near Gros Morne National Park. Judy has…

A: It represents the owners' original capital contribution to the firm as well as any retained earnings…

Q: Selling price Variable cost per unit Total units produced Machine-hours required to produce one unit…

A: Contribution Margin:Which is a Concept, which shows the relationship between the cost, sales and…

Q: Required: 1. Prepare a schedule of standard production costs for January, based on actual product 2.…

A: Variances are important in many industries, including finance (where they are used to estimate risk…

Q: The Wellness Catering Service had the following transactions in July, its first month of operations…

A: Note:"Since you have asked a question with sub-parts more than three, as per guidelines, the first…

Q: The following table shows data on the average number of customers processed by several bank service…

A: In this problem, we are asked to answer the following:a) Compute the labor productivity and the…

Q: ! Required information The Foundational 15 (Algo) [LO3-1, LO3-2, LO3-3, LO3-4] [The following…

A: Cost of goods manufactured :— It is the total cost of completed finished goods transferred from work…

Q: ka) Compute the number of units started and completed this period for the first production…

A: EQUIVALENT UNITS OF PRODUCTION Equivalent Production represents the production of a process in terms…

Q: Last month when Holiday Creations, Incorporated, sold 42,000 units, its sales, variable expenses,…

A: Contribution Margin Ratio = (Contribution Margin / Sales) * 100Variable Expense Ratio = (Variable…

Q: C & H Corp. uses a standard cost system, manufactured 18,000 bumper cars during 2021 using 154,000…

A: Material cost variance is a financial measure that assesses the differential between the…

Q: Lenter LLC placed in service on April 29, 2022 machinery and equipment (7-year property) with a…

A: As per section 179, a business owner is permitted to charge the immediate depreciation on the assets…

Q: Supplies Land Accounts Payable Common Stock Retained Earnings Totals Show Transcribed Text…

A: Financial statement: Financial statements are organized summaries of detailed information about the…

Q: The following information was gathered for the Greensprings Corporation for the most recent year.…

A: Allocated manufacturing overhead is calculated by multiplying a predetermined overhead rate by…

Q: Engberg Company installs lawn sod in nome yards. The company's most recent monthly contribution…

A: Degree of operating leverage(DOL) :— It is calculated by dividing total contribution margin by net…

Q: In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for…

A: Lets understand the basics.Responsibility report: The outcome of responsibility accounting is called…

Q: On February 1, 2024, Sanyal Motor Products issued 9% bonds, dated February 1, with a face amount of…

A: Note:"Since you have asked a question with sub-parts more than three, as per guidelines, the first…

Question

ABC Co. 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. ABC 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
The cost driver for this pool is the number of individual items that are inspected.
The third cost pool is used for general operations of the department and the cost driver is the number of
orders.
Cost Pool
Packaging & Shipping
Inspection
General Operations
$67,200
$200,000
$85,000
Estimated Total Costs
Cost Driver
Number of boxes
shipped
Number items
inspected
Number of
orders
Estimated
Annual Activity
16,000 boxes
100,000 items
10,000 orders

An order is shipped to a retail customer who has ordered 8 individual items. This order will be shipped in
4 separate boxes. What is the packing and shipping cost that will be allocated to the order?
$18.60
$4.20
$12.60
$8.40
$16.80
0000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduce to Activity Rate and Allocated Overhead Cost

VIEW

Step 2: Working for activity rate of packaging & shipping cost poil

VIEW

Step 3: Working for packaging & shipping cost allocated to order

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Current liabilities, Provisions and Contingencies

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The second stage of customer-based activity-based costing entails the assignment of: a. resource costs to sales departments. b. resources costs to distribution channels. c. customer-related activity costs to products. d. customer-related activity costs to customers.
Frenchys has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: What is the predetermined overhead rate for each activity?
What is the proper order of tasks In an ABC system? identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the products
The following items are associated with a traditional cost accounting information system, an activity-based cost accounting information system, or both (that is, some elements are common to the two systems): a. Usage of direct materials b. Direct materials cost assigned to products using direct tracing c. Direct labor cost incurrence d. Direct labor cost assigned to products using direct tracing e. Setup cost incurrence f. Setup cost assigned using number of setups as the activity driver g. Setup cost assigned using direct labor hours as the activity driver h. Cost accounting personnel i. Submission of a bid, using product cost plus 25 percent j. Purchasing cost incurrence k. Purchasing cost assigned to products using direct labor hours as the activity driver l. Purchasing cost assigned to products using number of orders as the activity driver m. Materials handling cost incurrence n. Materials handling cost assigned using the number of moves as the activity driver o. Materials handling cost assigned using direct labor hours as the activity driver p. Computer q. Costing out of products r. Decision to continue making a part rather than buying it s. Printer t. Customer service cost incurred u. Customer service cost assigned to products using number of complaints as the activity driver v. Report detailing individual product costs w. Commission cost x. Commission cost assigned to products using units sold as the activity driver y. Plant depreciation z. Plant depreciation assigned to products using direct labor hours Required: 1. For each cost system, classify the relevant items into one of the following categories: a. Interrelated parts b. Processes c. Objectives d. Inputs e. Outputs f. User actions 2. Explain the choices that differ between the two systems. Which system will provide the best support for the user actions? Explain. 3. Draw an operational model that illustrates each cost accounting systemwith the items that belong to the system used as examples for each component of the model. 4. Based on the operational models, comment on the relative costs and benefits of the two systems. Which system should be chosen?
Which of the following product situations is better suited to job order costing than to process costing? A. Each product batch is exactly the same as the prior batch. B. The costs are easily traced to a specific product. C. Costs are accumulated by department. D. The value of work in process is based on assigning standard costs.
Sanford, Inc., has developed value-added standards for four activities: purchasing parts, receiving parts, moving parts, and setting up equipment. The activities, the activity drivers, the standard and actual quantities, and the price standards for 20x1 are as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. Required: 1. Prepare a cost report that lists the value-added, non-value-added, and actual costs for each activity. 2. Which activities are non-value-added? Explain why. Also, explain why value-added activities can have non-value-added costs.
Which is not a step In activity-based costing? A. identify the activities performed by the organization B. identify the cost driver(s) associated with each activity C. compute a cost rate per production D. assign costs to products by multiplying the cost driver rate by the volume of the cost driver units consumed by the product
Rex Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity.
Carltons Kitchens three cost pools and overhead estimates are as follows: Compare the overhead allocation using: A. The traditional allocation method B. The activity-based costing method (Hint: the traditional method uses machine hours as the allocation base.)
Rocks Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity.
Classify the following cost drivers as structural, executional, or operational. a. Number of plants b. Number of moves c. Degree of employee involvement d. Capacity utilization e. Number of product lines f. Number of distribution channels g. Engineering hours h. Direct labor hours i. Scope j. Product configuration k. Quality management approach l. Number of receiving orders m. Number of defective units n. Employee experience o. Types of process technologies p. Number of purchase orders q. Type and efficiency of layout r. Scale s. Number of functional departments t. Number of planning meetings
Activity-based management includes both process value analysis and activity-based costing. Which of the following features is primarily associated with process value analysis? a. Defining root causes of each activity b. Identifying cost objects and activity drivers c. Calculating activity rate d. Assigning costs to cost objects