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What amount of shipping department costs should be allocate

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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:

Cost Pool                                  Total Costs                             Cost Driver                             Annual Activity

Packaging and shipping             $162,600                         Number of boxes shipped                        20,700 boxes

Final inspection                            $195,000                     Number of individual items shipped              99,300 items

General operations and supervision $83,200                          Number of orders                                  8,000 orders

Question 1: During the period, the Far East sales office generated 677 orders for a total of 6,150 items. These orders were shipped in 1,296 boxes. What amount of shipping department costs should be allocated to these sales?

Reference no: EM132499847

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