Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites...
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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 Amount Cost Driver $ 702,000 Boxes of yarn sold to retail stores 307,200 Number of online leads Pay-per-click/Search engine optimization Cost of online sales Credit and collection Total selling costs 110,400 69,000 Skeins sold online Number of retail orders $ 1,188,600 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: 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: Order Size Small Medium Large Online Sales 1 to 10 skeins 11 to 20 skeins Over 20 skeins Retail Sales 1 to 10 boxes 11 to 20 boxes 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 3,500 82,000 515 267,100 Order Size Medium Large Total 49,500 55,000 2,565 234,700 181,000 47,000 3,820 234,000 184,000 6,900 112,600 614,400 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 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 Amount Cost Driver $ 702,000 Boxes of yarn sold to retail stores 307,200 Number of online leads Pay-per-click/Search engine optimization Cost of online sales Credit and collection Total selling costs 110,400 69,000 Skeins sold online Number of retail orders $ 1,188,600 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: 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: Order Size Small Medium Large Online Sales 1 to 10 skeins 11 to 20 skeins Over 20 skeins Retail Sales 1 to 10 boxes 11 to 20 boxes 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 3,500 82,000 515 267,100 Order Size Medium Large Total 49,500 55,000 2,565 234,700 181,000 47,000 3,820 234,000 184,000 6,900 112,600 614,400 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.
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Managerial Accounting Creating Value In A Dynamic Business Environment
ISBN: 9781264100699
13th Edition
Authors: Ronald Hilton, David Platt
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