Question
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
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 in an appropriate cost driver for these costs. The second cost pool is made up costs related to the final inspection of each time before it is shipped and the cost driver for this pool is the 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 department is summarized below:
Cost Pool____________Total Costs______________Cost Driver___________________Annual Activity
Packaging and Shipping____$169100_____________Number of boxes shipped___________22200 boxes
Final Inspection___________$203200____________Number of individual items shipped____96200 items
General operations and supervision__$82700________Number of orders_________________9700 orders
During the period, the Far East sales office generated 650 orders for a total of 6040 items. These orders were shipped in 1484 boxes. What amount of shipping department costs should be allocated to these sales?
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