Shrute Inc, manufactures office copiers, which are sold to retailers. The price
ID: 2342078 • Letter: S
Question
Shrute Inc, manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: Price Cost of goods sold $740 per unit 440 $300 per unit In addition, the company incurs selling and administrative expenses of $276,300. The company wishes to assign these costs to its three major retail hese expenses are related to its three major activities customers, The Warehouse, Kosmo Co., and Supply Universe. T nonmanufacturing activities: customer service, retailer's sale of Shrute copiers to consumers. The budgeted activity costs and activity bases associated with these activities are: Activity sales order processing, and advertising support. The advertising support is in the form of advertisements that are placed by Shrute Inc. to support the Budgeted Activity Activity Base Cost $40,300 28,000 208,000 $276,300 Number of service requests Number of sales orders Number of ads placed Total activity costExplanation / Answer
Answer:
1
Activity
Cost
Cost Driver
Activity Rate
A
B
C=A/B
Customer Service
40300
260
No. of service requests
155
Sales Order Processing
28000
800
No. of sales orders
35
Advertising Support
208000
160
No. of ads placed
1300
2
Determination of customer wise activity cost
Customer
Activity Cost
Activity Cost
Activity Cost
Total
Customer Service
Sales order processing
Advertising
Cost
Support
The Warehouse
155*50=
7750
35*220=
7700
1300*20=
26000
41450
Kosmo Co.
155*10=
1550
35*100=
3500
1300*20=
26000
31050
Supply Universe
155*200=
31000
35*480=
16800
1300*120=
156000
203800
Total cost
The Warehouse
41450
Kosmo Co.
31050
Supply Universe
203800
3
The Warehouse
Kosmo Co.
Supply Universe
sales (unit sold * 740)
429,200
429,200
429,200
less:cost of goods sold (440*unit sold)
255,200
255,200
255,200
Gross profit (300*unit sold)
174,000
174,000
174,000
less:selling and administration activities
customer service
7750
1550
31000
project bidding
7700
3500
16800
engineering suppot
26000
26000
156000
Income from operations
132,550
142,950
-29,800
Activity
Cost
Cost Driver
Activity Rate
A
B
C=A/B
Customer Service
40300
260
No. of service requests
155
Sales Order Processing
28000
800
No. of sales orders
35
Advertising Support
208000
160
No. of ads placed
1300
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