Shanghai Company sells glasses, fine china, and everyday dinnerware. They use ac

Question

Shanghai Company sells glasses, fine china, and everyday dinnerware. They use activity-based costing to determine the cost of the shipping and handling activity. The shipping and handling activity has an activity rate of $9 per pound. A box of glasses weighs 2 lbs, the box of china weighs 4 lbs, and a box of everyday dinnerware weighs 6 lbs. Round answers to nearest whole dollar. a Determine the shipping and handling activity for each product. Glasses China Everyday dinnerware b Determine the total shipping and receiving costs for the china if 6,200 boxes are shipped

Explanation / Answer

a)

Cost of shipping and handling activity

= Number of pounds handled x Cost per pound

Glasses

= 2 x $9

= $18

China

= 4 x $9

= $36

Every day Dinnerware

= 6 x $9

= $54

b)

Total shipping and receiving cost for china

= Number of boxes x Weight per box x Rate per pound

= 6,200 x 4 x $9

= $223,200

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