Question

Activity-Based Costing: Selling and Administrative Expenses Jungle Junior Company manufactures and sells outdoor play equipment. Jungle Junior uses activity-based costing to determine the cost of the sales order processing and the customer return activity. The sales order processing activity has an activity rate of $20 per sales order, and the customer return activity has an activity rate of $100 per return. Jungle Junior sold 2,500 swing sets, which consisted of 750 orders and 80 returns.

Required:
a. Determine the total sales order processing and customer return activity cost for swing sets.
b. Determine the per-unit sales order processing and customer return activity cost for swing sets. Round your answer to the nearest cent.

Answer 1

Answer: 1}ToTAL Activity cost =$23,000

2a) Sales order Processing Activity per unit sale=$6.00

2b)customer return activity per unit sale=$3.20

Step-by-step explanation:

a. total sales order processing and customer return activity cost for swing sets

Sales order Processing Activity =Number of orders x rate per sales order

=750 x 20 = $15,000

customer return activity = Number of returns x rate per return

= 80 x 100= $8,000

ToTAL Activity cost = Sales order Processing Activity +customer return activity= $15,000 + $8000 = $23,000

b)per-unit sales order processing and customer return activity cost for swing sets

Cost of Sale order processing = $15,000

Number of swing set sold = 2,500

Therefore Sales order Processing Activity per unit sale = Cost of Sale order processing/ Number of swing set sold = $15,000/ 2,500= $6.00

customer return activity cost = $8,000

Number of swing set sold = 2,500

Therefore customer return activity per unit sale= customer return activity cost / Number of swing set sold = $8,000/ 2,500= $3.20

ToTAL Activity cost per unit sale = Sales order Processing Activity cost per unit +customer return activity cost per unit = $6.00 + $3.20 = $9.20