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 Sales commissions Cost Driver Amount Boxes of yarn sold to retail stores Catalogs distributed Skeins sold through catalog 814,500 Catalogs Cost of catalog sales 453,240 158,200 99,900 Number of retail orders Credit and collection Total selling costs $1,525,840 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: Catalog Sales 1-10 skeins 11-20 skeins Order Size Small Retail Sales 1-10 boxes 11-20 boxes Medium Over 20 skeins Large Over 20 boxes An analysis of the previous year's records produced the following statistics Order Size Medium Total Small Large 195,000 61,000 7,180 Retail sales in boxes (12 skeins per box) 6,000 271,500 226,000 11,100 70,500 69,000 3,265 Catalog sales in skeins Number of retail orders 96,000 655 Catalogs distributed 268,175 280,525 206,700 755,400 Required: 1. Prepare a schedule showing Redwood Company's total selling cost for each order size and the per-skein selling order size. (Round your intermediate calculations and unit cost per order to 2 decimal places.) REDWOOD COMPANY Computation of Selling Costs By Order Size and Per Skein Within Each Order Size Order Size Small Medium Large Total Sales commissions Catalogs 0 0 Cost of catalog sales 0 Credit and collection Total cost for all orders of a given size 0 C C 0 Units (skeins) sold |Unit cost per order of a given size OC Cost of catalog sales 0 Credit and collection 0 Total cost for all orders of a given size 0 $ 0 $ 0 0 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.) 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. Marketing should be focused on small sized orders