Ritz Company sells fine collectible statues and has implemented activity-based c
ID: 2498169 • Letter: R
Question
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 costs 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 department is summarized below
During the period, the Far East sales office generated 668 orders for a total of 6,190 items. These orders were shipped in 1334 boxes. What amount of shipping department costs should be allocated to these sales?
B.Baller Financial is a banking services compnay that offers many different types of checking accounts. The bank has recently adopted an activity-based consting system to assign costs to their various types of chcking accounts. the following data relate to the money market checking accounts, one of the popular checkking accounts, and the ABC cost pools:
Annual number of account= 54000 accounts checking accounts cost pools
annual activity information related to cost drivers
Calculate the overhead cost per account for the Money Market Checking?
cost pool total cost cost driver annual activity packaging and shiping 164200 number of boxes shipped 24300 boxes final inspection 199800 number of individual items shipped 99700 items general operation and supervision 80800 number of orders 9000 ordersExplanation / Answer
cost pool
total cost
cost driver
annual activity
Cost per activity
packaging and shipping
164200
number of boxes shipped
24300 boxes
=164200/24300
= 6.76
final inspection
199800
number of individual items shipped
99700 items
=199800/99700
=2
general operation and supervision
80800
number of orders
9000 orders
=80800/9000
= 8.98
Amount of Cost shipping department should be allocated to these sales
packaging and shipping cost = 1334 boxes * 6.76 = 9017.84
final inspection = 6,190 items * 2 = 12380
general operation and supervision = 668 orders * 8.98 = 5998.64
Overhead cost per account for the Money Market Checking=
Cost pool
Cost
Cost driver
All product
Cost per product
returned check cost
2880000
number of returned checks
191000
=2880000/191000
=15.08
checking account recon cost
55000
# of acct recon request
392000
=55000/392000
=0.14
new account set up
632000
# of new acct
53000
=632000/53000
=11.92
copies of cancelled checks
392000
# of cancelled check copy request
99000
=392000/99000
=3.96
online banking website maintenance
187000
per product group( type of account)
1
=187000/1
=187000
money market checking
Cost per product
Cost per account
18000
15.08
271440
420
0.14
58.8
15000
11.92
178800
60000
3.96
237600
1
187000
187000
cost pool
total cost
cost driver
annual activity
Cost per activity
packaging and shipping
164200
number of boxes shipped
24300 boxes
=164200/24300
= 6.76
final inspection
199800
number of individual items shipped
99700 items
=199800/99700
=2
general operation and supervision
80800
number of orders
9000 orders
=80800/9000
= 8.98
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