Question
Poppeys makes two juice: a regular juice and a premium juice. Poppeys distributes the regular juice and the premium juice through different distribution channels. It
Poppeys makes two juice: a regular juice and a premium juice. Poppeys distributes the regular juice and the premium juice through different distribution channels. It distributes 2,40,000 cases of regular juice through 10 general distributors and 1,60,000 cases of the premium juice through 30 specialty distributors. Poppeys incurs Tk. 42,60,000 in distribution costs. Under its existing costing system, Poppeys allocates distribution costs to products on the basis of cases shipped. To understand better the demands on its resources in the distribution area, Poppeys identifies three activities and related activity costs. (a) Promotional costs-Poppeys estimates it incurs Tk. 16,000 per distributor. (b) Order handling costs-Poppeys estimates costs of Tk. 600 pertaining to each order. Poppeys records show that distributors of regular juice place an average of 10 orders per year, whereas distributors of premium juice place an average of 20 orders per year. (c) Delivery costs- Tk. 8 per case. Required: (1) Using Poppeys activity-based costing system, calculate the total distribution costs and distribution cost per case for the regular juice and the premium juice.
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