Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites...

 

Transcribed Image Text:

Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some of the items are manufactured by TCC, 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, TCC 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 Pay-per-click/Search engine optimization Cost of online sales Credit and collection Total selling costs Cost Driver Boxes of yarn sold to retail stores. Number of online leads Skeins sold online. Amount $ 811,500 404,720 206,100 91,200 Number of retail orders $ 1,513,520 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 online sales. The cost of online sales includes technology infrastructure costs and the wages of personnel who process the online orders. Jackson believes that the selling costs vary significantly with the size of the order. Order sizes are divided into three categories as follows: Online Sales Retail Sales 1 to 10 boxes. Order Size Small 1 to 10 skeins Medium Large 11 to 20 skeins 11 to 20 boxes Over 20 skeins Over 20 boxes An analysis of the previous year's records produced the following statistics. Items Retail sales boxes (12 skeins per box) Online sales, skeins Number of retail orders Number of online leads. Required: Small 2,500 97,000 665 128,850 Order Size Medium 72,000 70,000 3,315 260,225 Large 196,000 62,000 7,420 116,825 Total 270,500 229,000 11,400 505,900 1. Prepare a schedule showing TCC's total selling cost for each order size and the per-skein selling cost within each order size. Note: Round your intermediate calculations and unit cost per order to 2 decimal places. TEXTILE CRAFT COMPANY Computation of Selling Costs By Order Size and Per Skein Within Each Order Size Order Size Small Medium Large Total Sales commissions $ Pay-per-click/Search engine optimization Cost of online sales 7,500 $ 103,080 87.300 216,000 $ 588,000 $ 208,180 63,000 93,460 55,800 811,500 404,720 206,100 Credit and collection 0 Total cost for all orders of a given size $ 197,880 $ 487,180 $ 737,260 $ 1,422,320 Units (skeins) sold Unit cost per order of a given size. 2. An analysis of selling costs shows: Note: 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. Check my work is not available. 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. < Prev 1 of 2 Next > Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some of the items are manufactured by TCC, 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, TCC 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 Pay-per-click/Search engine optimization Cost of online sales Credit and collection Total selling costs Cost Driver Boxes of yarn sold to retail stores. Number of online leads Skeins sold online. Amount $ 811,500 404,720 206,100 91,200 Number of retail orders $ 1,513,520 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 online sales. The cost of online sales includes technology infrastructure costs and the wages of personnel who process the online orders. Jackson believes that the selling costs vary significantly with the size of the order. Order sizes are divided into three categories as follows: Online Sales Retail Sales 1 to 10 boxes. Order Size Small 1 to 10 skeins Medium Large 11 to 20 skeins 11 to 20 boxes Over 20 skeins Over 20 boxes An analysis of the previous year's records produced the following statistics. Items Retail sales boxes (12 skeins per box) Online sales, skeins Number of retail orders Number of online leads. Required: Small 2,500 97,000 665 128,850 Order Size Medium 72,000 70,000 3,315 260,225 Large 196,000 62,000 7,420 116,825 Total 270,500 229,000 11,400 505,900 1. Prepare a schedule showing TCC's total selling cost for each order size and the per-skein selling cost within each order size. Note: Round your intermediate calculations and unit cost per order to 2 decimal places. TEXTILE CRAFT COMPANY Computation of Selling Costs By Order Size and Per Skein Within Each Order Size Order Size Small Medium Large Total Sales commissions $ Pay-per-click/Search engine optimization Cost of online sales 7,500 $ 103,080 87.300 216,000 $ 588,000 $ 208,180 63,000 93,460 55,800 811,500 404,720 206,100 Credit and collection 0 Total cost for all orders of a given size $ 197,880 $ 487,180 $ 737,260 $ 1,422,320 Units (skeins) sold Unit cost per order of a given size. 2. An analysis of selling costs shows: Note: 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. Check my work is not available. 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. < Prev 1 of 2 Next >