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Exerclse 5-35 ABC; Selling Costs (LO 5-2, 5-4) Redwood Company sells craft kits and supplies to retail outlets and through its catalog. Some of the
Exerclse 5-35 ABC; Selling Costs (LO 5-2, 5-4) Redwood Company sells craft kits and supplies to retail outlets and through its catalog. Some of the items are manufactured by Redwood, while others are purchssed for resole. For the products it manufoctures, the compony currently boses 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, Redwood 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 post two years for one of its products, skeins of knitting yorn, Jockson has selected four categories of selling costs ond chosen cost drivers for each of these costs. The selling costs octually incurred during the post year and the cost drivers are as follows: The knitting yorn is sold to retsil outlets in bowes, esch contoining 12 skeins of yorn. The sole of portisl boxes is not permitted. Commissions are paid on sales to retail outlets but not on catalog sales. The cost of catalog sales includes telephone costs and the woges of personnel who take the catalog orders. Jockson believes that the selling costs vory significantly with the size of the order. Order sizes are divided into three categories as follows: An anslysis of the previous year's records produced the following statistics. Required: 1. Prepsre a schedule showing Redwood Compony's total selling cost for each order size and the per-skein selling cost within each order size. (Round your Intermedlate calculations and unit cost per order to 2 decimal places.)
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