Rand Company sells fine collectible statues and has implemented activity based c

Question

Rand Company sells fine collectible statues and has implemented activity based costing Costs in the shipping department have be divided into three cost pools The first cost pool contains costs that are related to packaging and shipping and Rand has determined number of boxes shipped is an appropriate cost driver (or 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 pod is the number of individual items that are inspected and! 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 department is summarized below An order is shipped to a retail customer who has ordered 10 individual items This order will be shipped m 3 separate boxes What is shipping department cost that will be allocated to the order?

Explanation / Answer

Packaging & shipping 170000/25000*3 20.4 Final inspection 200000/100000*10 20 General Operation & supervision 85000/10000*1 8.5 Shipping department cost allocated to the order 48.9

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