Ex 5-35 (Algo) ABC; Selling Costs (LO 5-2, 5-4)

Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some of the items are manufactured by TCC, while others are purchased for resale. For the products it manufactures, the company currently bases its selling prices on a product-costing system that accounts for direct material, direct labor, and the associated overhead costs. In addition to these product costs, TCC incurs substantial selling costs, and Roger Jackson, controller, has suggested that these selling costs should be included in the product pricing structure.

After studying the costs incurred over the past two years for one of its products, skeins of knitting yarn, Jackson has selected four categories of selling costs and chosen cost drivers for each of these costs. The selling costs actually incurred during the past year and the cost drivers are as follows:

Cost Category	Amount	Cost Driver
Sales commissions	$ 945,000	Boxes of yarn sold to retail stores
Pay-per-click/Search engine optimization	390,420	Number of online leads
Cost of online sales	130,200	Skeins sold online
Credit and collection	91,800	Number of retail orders
Total selling costs	$ 1,557,420

The knitting yarn is sold to retail outlets in boxes, each containing 12 skeins of yarn. The sale of partial boxes is not permitted. Commissions are paid on sales to retail outlets but not on online sales. The cost of online sales includes technology infrastructure costs and the wages of personnel who process the online orders. Jackson believes that the selling costs vary significantly with the size of the order. Order sizes are divided into three categories as follows:

Order Size	Online Sales	Retail Sales
Small	1 to 10	skeins	1 to 10	boxes
Medium	11 to 20	skeins	11 to 20	boxes
Large	Over 20	skeins	Over 20	boxes

An analysis of the previous years records produced the following statistics.

Items	Order Size	Total
Small	Medium	Large
Retail sales boxes (12 skeins per box)	4,500	66,000	192,000	262,500
Online sales, skeins	93,000	66,000	58,000	217,000
Number of retail orders	625	3,115	6,460	10,200
Number of online leads	315,150	333,330	132,360	780,840

Prepare a schedule showing TCC's total selling cost for each order size and the per-skein selling cost within each order size. Note: Round your intermediate calculations and unit cost per order to 2 decimal places