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:

G ezto.mheducation.com C Connect Assignment Print View9.pdf Home - MyLaverne course hero - ATha Bing Course Hero Homework Help - Q&A from Online T... + Chapter 5 Saved Help Save & Exit Submit Check my work 2 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 10 costs, Redwood incurs substantial selling costs, and Roger Jackson, controller, has suggested that these selling costs should be points 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 eBook the cost drivers are as follows: Cost Category Amount Cost Driver Sales commissions $ 811,500 Boxes of yarn sold to retail stores Print Catalogs 404,720 Catalogs distributed Cost of catalog sales 206, 100 Skeins sold through catalog Credit and collection 91,200 Number of retail orders Total selling costs $1, 513, 520 References 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 1-10 skeins 1-10 boxes Medium 11-20 skeins 11-20 boxes Large Over 20 skeins Over 20 boxes An analysis of the previous year's records produced the following statistics. Order Size Small Medium Large Total Retail sales in boxes (12 skeins per box) 2,500 72 ,000 196 ,000 270,500 Catalog sales in skeins 97,000 70 , 000 62,000 229,000 Number of retail orders 665 3, 315 7, 420 11, 400 Catalogs distributed 128 , 850 260,225 116 , 825 505, 900 Mc Graw G ezto.mheducation.com C Connect Assignment Print View9.pdf Home - MyLaverne course hero - ATcha Bing Course Hero Homework Help - Q&A from Online T.. + Chapter 5 i Saved Help Save & Exit Submit Check my work 2 Order Size Small Medium Large Total Retail sales in boxes (12 skeins per box) 2,500 72 ,000 196,000 270,500 Catalog sales in skeins 97,000 70,000 62,000 229,000 Number of retail orders 665 3, 315 7, 420 11, 400 10 128, 850 260,225 116, 825 505, 900 points Catalogs distributed Required: 1. Prepare a schedule showing Redwood Company's total selling cost for each order size and the per-skein selling cost within each eBook order size. (Round your intermediate calculations and unit cost per order to 2 decimal places.) REDWOOD COMPANY Print Computation of Selling Costs By Order Size and Per Skein Within Each Order Size Order Size References Small Medium Large Total Sales commissions 7,500 $ 216,000 $ 588,000: $ 811,500 Catalogs Cost of catalog sales Credit and collection Total cost for all orders of a given size $ 7,500 $ 216,000 $ 588,000 $ 811,500 Units (skeins) sold Unit cost per order of a given size 2. An analysis of selling costs shows: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Mc Graw G ezto.mheducation.com C Connect Assignment Print View9.pdf Home - MyLaverne course hero - ATcha Bing Course Hero Homework Help - Q&A from Online T.. + Chapter 5 Saved Help Save & Exit Submit Check my work 2 REDWOOD COMPANY Computation of Selling Costs By Order Size and Per Skein Within Each Order Size Order Size 10 Small Medium Large Total points Sales commissions $ 7,500 $ 216,000 $ 588,000 : 811,500 Catalogs Cost of catalog sales eBook and collection Total cost for all orders of a given size 7,500 $ 216,000 $ 588,000 $ 811,500 Units (skeins) sold Print Unit cost per order of a given size References 2. An analysis of selling costs shows: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Management may want to consider offering discounts for large orders. ? Small orders are preferable to medium sized orders. ? Large orders are preferable to medium sized orders. 2 ? Marketing should be focused on small sized orders. Mc Graw Hill ducation