2.

To determine selling and administrative expenses to allocate to products, Wake Coffee Co. uses activity-based costing. The company breaks this expense into customer return processing and shipping and handling, with total estimated costs of $6,000 and $7,000, respectively. The company expects to receive 200 returns and prepare 350 special shipments.

a. Calculate the activity rate for customer return processing and shipping and handling.

b. The Deluxe Coffee receives 57 returns and requires 210 special shipments. Determine the amount of selling and administrative expenses related to these activities that will be allocated to the product.