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Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has
Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan 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 Kragan's product lines at a rate of 70% of direct materials costs. Its direct materials costs for the month of March for Kragan's "high-intensity line of athletic wear are $400,000. The company has decided to extend activity-based costing to its selling costs. Data relating to the high intensity" line of products for the month of March are as follows Overhead Rate Activity Cost Pools Sales commissions Advertising-TV Advertising-Internet Cost Drivers Dollar sales Minutes Column inches Number of Cost Drivers Used per Activity $0.05 per dollar sales $900,000 $300 per minute $20 per column inch Catalogs Catalogs mailed $2.50 per catalog 250 2000 60000 Cost of catalog sales Catalog orders $1 per catalog order 9,000 Credit and collection Dollar sales $0.03 per dollar sales $900.000 () Compute the selling costs to be assigned to the high-intensity line of athletic wear for the month of March (1) using the traditional product costing system (direct materials cost is the cost driver), and (2) using activity bed costing MacBook Pr A 2 Q 3 W E %6 A 4 5 O R T - 1 B 0 Y C 1 O A S D F G H J K L N V x C V B N M option command P . V L H P command option ?
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