What amount of shipping department costs should be allocated

Assignment Help Managerial Accounting

Reference no: EM133447468

Case Study: 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	$162,100	Number of boxes shipped	22,900 boxes
Final inspection	$203,300	Number of individual items shipped	99,400 items
General operations and supervision	$82,300	Number of orders	9,300 orders

During the period, the Far East sales office generated 656 orders for a total of 6,120 items. These orders were shipped in 1,384 boxes. What amount of shipping department costs should be allocated to these sales?

Reference no: EM133447468

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