Activity-Based Costing: Selling and Administrative Expenses Comfort Step Company

Question

Activity-Based Costing: Selling and Administrative Expenses

Comfort Step Company manufactures and sells shoes. Comfort Step uses activity-based costing to determine the cost of the sales order processing and the shipping activity. The sales order processing activity has an activity rate of $78 per sales order, and the shipping activity has an activity rate of $15 per shipment. Comfort Step sold 20,000 units of walking shoes, which consisted of 3,900 orders and 400 shipments.

a. Determine the total sales order processing and shipping activity cost for walking shoes.
$

b. Determine the per-unit sales order processing and shipping activity cost for walking shoes. If required, round your answer to the nearest cent.
$per unit

Explanation / Answer

Price $ 78 per sales order Shipping Activity $ 15 per shipment Units 20000 units Orders 3900 Shipments 400 Total Sales order processing cost 3900*78 304200 Per unit 78 Shipping Cost 400*15 6000 Per unit 15

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