Question

Shanghai Company sells glasses, fine china, and everyday dinnerware. It uses activity-based costing to determine the cost of the shipping and handling activity. The shipping and handling activity has an activity rate of $12 per pound. A box of glasses weighs 2 pounds, a box of fine china weighs 4 pounds, and a box of everyday dinnerware weighs 6 pounds. a Determine the shipping and handling activity cost to be allocated to each unit of product. Glasses $ Fine China $ Everyday dinnerware $ b Determine the total shipping and receiving costs to be allocated to the fine china if 3,100 boxes are shipped.

Answer 1

a) Shipping and handling cost of each product:

Glasses = $ 24, China = $ 48, Everyday dinnerware = $ 72

b) Total shipping and receiving costs of 3,500 boxes of fine China is $148,800

Step-by-step explanation:

a) Shipping and handling cost of each product:

Glasses = Weighs × Activity rate per lbs = 2 lbs × $ 12 = $ 24

China = Weighs × Activity rate per lbs = 4 lbs × $ 12 = $ 48

Everyday dinnerware = Weighs × Activity rate per lbs = 6 lbs × $ 12 = $ 72

b) Total shipping and receiving costs of 3,100 boxes of fine China

= 3100 boxes × Shipping and receiving cost each product

= 3100 × 48

= $ 148,800