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Comfort Step Company manufactures and sells shoes. Comfort Step uses activity-based costing to determine the cost...

Comfort Step Company manufactures and sells shoes. Comfort Step uses activity-based costing to determine the cost of the sales order processing and the shipping activity. The sales order processing activity has an activity rate of $69 per sales order, and the shipping activity has an activity rate of $5 per shipment. Comfort Step sold 20,000 units of walking shoes, which consisted of 3,500 orders and 300 shipments.

a. Determine the total sales order processing and shipping activity cost for walking shoes.
$__________

b. Determine the per-unit sales order processing and shipping activity cost for walking shoes. If required, round your answer to the nearest cent.
___________$per unit

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Homework Answers

Answer #1

a. Total Sales Order Processing Cost = Activity Rate * Total Orders

= $ 69 * 3,500 Orders

= $ 241,500

Total  shipping activity cost =  Activity Rate * Total Shipments

= $ 5 * 300 Shipments

= $ 1,500

Hence the correct answer is :

Total Sales Order Processing Cost = $ 241,500

Total  shipping activity cost = $ 1,500

b. per-unit   sales order processing cost = Total Sales Order Processing Cost  / Total Units

= $ 241,500 / 20,000 Units

= $ 12.075

= $ 12.08

Per Unit shipping activity cost = Total  shipping activity cost / Total Units

= $ 1,500 / 20,000 Units

= $ 0.075

= $ 0.08

Hence the correct answer is :

per-unit   sales order processing cost = $ 12.08

Per Unit shipping activity cost = $ 0.08

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