Question

Ranada Company manufactures and sells sportswear products. Ranada uses activity-based costing to determine the cost of the customer return processing and shipping activities. The customer return processing activity has an activity rate of $40 per return, and the shipping activity has an activity rate of $10 per shipment. Ranada shipped 3,000 units of Product 1 in 1,200 shipments (some shipments are more than one unit). There were 120 returns. what is the per-unit customer cost for the combined shipping and return activities of product 1?

a. $22.40 per unit
b. $5.60 per unit
c. $50.00 per unit
d. $1.60 per unit

Answer 1

The per-unit customer cost for the combined shipping and return activities of Product 1 is $5.60 per unit.

Step-by-step explanation:

In order to find the per-unit customer cost for the combined shipping and return activities of Product 1, we need to calculate the total cost for these activities and then divide it by the number of units shipped.

For the customer return processing activity, the cost per return is $40 and there were 120 returns, so the total cost for return processing is 120 x $40 = $4,800.

For the shipping activity, the cost per shipment is $10 and there were 1,200 shipments, so the total cost for shipping is 1,200 x $10 = $12,000.

The combined cost for return processing and shipping is $4,800 + $12,000 = $16,800.

Since there were 3,000 units shipped, the per-unit customer cost for the combined activities is $16,800 / 3,000 = $5.60 per unit.