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Activity-Based Costing: Selling and Administrative Expenses Jungle Junior Company manufactures and sells outdoor play equipment. Jungle Junior...

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Accounting

Activity-Based Costing: Selling and Administrative Expenses

Jungle Junior Company manufactures and sells outdoor playequipment. Jungle Junior uses activity-based costing to determinethe cost of the sales order processing and the customer returnactivity. The sales order processing activity has an activity rateof $75 per sales order, and the customer return activity has anactivity rate of $15 per return. Jungle Junior sold 10,000 swingsets, which consisted of 2,800 orders and 300 returns.

a. Determine the total sales order processingand customer return activity cost for swing sets.
$

b. Determine the per-unit sales orderprocessing and customer return activity cost for swing sets. Ifrequired, round your answer to the nearest cent.
$per unit

Answer & Explanation Solved by verified expert
3.6 Ratings (581 Votes)

Activity-Based Costing: Selling and Administrative Expenses
Requirement A :
Total Activity cost
Activity Number (A) Rate (B) Total (A*B)
Sales order Processing 2800 $        75.00 $     210,000.00
Customer return activity 300 $        15.00 $        4,500.00
Total $ 214,500.00
Requirement B :
Sales order processing cost $ 210,000.00
Number of Sewing sets sold 10000 Sets
Cost per unit = 210000/10000 $        21.00
Customer return activity $    4,500.00
Number of Sewing sets sold 10000 Sets
Customer return actvity cost =4500/10000 $          0.45
Total activity cost per unit = 21+0.45 $        21.45

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