Question

Activity-Based Costing: Selling and Administrative Expenses

Jungle Junior Company manufactures and sells outdoor play equipment. Jungle Junior uses activity-based costing to determine the cost of the sales order processing and the customer return activity. The sales order processing activity has an activity rate of $75 per sales order, and the customer return activity has an activity rate of $15 per return. Jungle Junior sold 10,000 swing sets, which consisted of 2,800 orders and 300 returns.

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

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

Answer 1

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