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 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, 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 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 $ 702,000 Boxes of yarn sold to retail stores

Catalogs 307,200 Catalogs distributed

Cost of catalog sales 110,400 Skeins sold through catalog

Credit and collection 69,000 Number of retail orders

Total selling costs $ 1,188,600

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 catalog sales. The cost of catalog sales includes telephone costs and the wages of personnel who take the catalog 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 Catalog Sales Retail Sales

Small 110 skeins 110 boxes

Medium 1120 skeins 1120 boxes

Large Over 20 skeins Over 20 boxes

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

Order Size

Small Medium Large Total

Retail sales in boxes (12 skeins per box) 3,500 49,500 181,000 234,000

Catalog sales in skeins 82,000 55,000 47,000 184,000

Number of retail orders 515 2,565 3,820 6,900

Catalogs distributed 267,100 234,700 112,600 614,400

Required:

1. Prepare a schedule showing Redwood Companys total selling cost for each order size and the per-skein selling cost within each order size. (Round your intermediate calculations and unit cost per order to 2 decimal places.)