Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $ 751,500 Boxes of yarn sold to retail stores
Catalogs 430,400 Catalogs distributed
Cost of catalog sales 123,000 Skeins sold through catalog
Credit and collection 99,000 Number of retail orders
Total selling costs $ 1,403,900

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) 2,500 60,000 188,000 250,500
Catalog sales in skeins 89,000 62,000 54,000 205,000
Number of retail orders 585 2,915 5,500 9,000
Catalogs distributed 412,730 283,470 164,600 860,800

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.)

please provide below information for all three SMALL , MEDIUM and LARGE in a table

a) Sales commission

b) Catalogs

c) cost of catalog sales

d) credit and collection

e) Unit SOld

f) Unit cost of order per given size

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: John Hoggett, Lew Edwards, John Medlin

6th Edition

0470806583, 978-0470806586

More Books

Students also viewed these Accounting questions