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 $69 per sales order, and the customer return activity has an activity rate of $10 per return. Jungle Junior sold 10,000 swing sets, which consisted of 4,900 orders and 400 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

A) Total Activity Cost

Activity	Number(1)	Rate(2)	Total(1*2)
Sales order Processing	4900	69	3,38,100
Customer return activity	400	10	4000
Total			$3,42,100

Therefore , Total Activity Cost is $342,100

b) Sales order processing cost is $3,38,100

Number of Sewing sets sold is $10,000

Sales order processing activity cost per unit is 338,100/10000=$33.81

Consumer return activity cost is $ 4000

Number of sewing sets is10,000

Customer return activity cost=4000/10000=0.40

Total activity cost per unit $=$33.81+$0.40=$34.21