Ritz company sells fine collectible statues and has, Ask an Expert

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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 cost 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 shipment is summarized below:

Cost pool Activity taret Cost Cost Driver Annual packaging and shipping $162100 number of boxes shipped; 23,600 boxes Final Inspection $199400 # of individual itemes shipped; 99,000 items General operations and supervision $82600 # of orders; 9900 During the period, the Far East sales office generated 698 orders for a total of 6,130 items.

These orders were shipped in 1,453 boxes. What amount of shipping department costs should be allocated to these sales?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93061210

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