Q5

Ritz Company sells fine collectible statues and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping and Rand has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final number of individual items that are inspected and shipped. The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the departments is summarized below.

Annual

Cost Pool Total Costs Cost Driver Activity

Packaging & shipping $166,800 No. of boxes Shipped 24,800 boxes

Final inspection $197,900 No. of individual

items shipped 97,300 items

General operations

and supervision $81,100 No. of orders 9,400 orders

During the period, the Far East sales office generated 665 orders for a total of 6,060 items. These orders were shipped in 1,329 boxes. What amount of shipping department costs should be allocated to these sales?