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Concord Clothing Company thanufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Concord has for
Concord Clothing Company thanufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Concord has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Concord's product lines at a rate of 70% of direct materials costs. Its direct materials costs for the month of March for Concord's "high-intensity" line of athletic wear are $410,000. The company has decided to extend activity-based costing to its selling costs (for internal decision-making only). Data relating to the "high-intensity" line of products for the month of March are as follows. Activity Cost Pools Sales commissions Cost Drivers Dollar sales Overhead Rate Number of Cost Drivers Used per Activity $0.05 per dollar sales Advertising-TV Advertising-Internet Catalogs Minutes $300 per minute $925,000 260 Column inches $10 per column inch 2,000 Catalogs mailed $2.50 per catalog 59,000 Cost of catalog sales Credit and collection Catalog orders $1 per catalog order 9,150 Dollar sales $0.03 per dollar sales $925,000
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