Ranada company manufactures and sells sportswear products. ranada uses activity-based costing to determine the cost of the customer return processing and the shipping activity. the customer return processing activity has an activity rate of $45 per return, and the shipping activity has an activity rate of $10 per shipment. ranada shipped 3,000 units of product 1 in 1,200 shipments (some shipments are more than one unit). there were 150 returns. determine the total activity costs for the return and shipping activities of product 1.

Question

Angelique Todd

Business

11 September, 13:21

Ranada company manufactures and sells sportswear products. ranada uses activity-based costing to determine the cost of the customer return processing and the shipping activity. the customer return processing activity has an activity rate of $45 per return, and the shipping activity has an activity rate of $10 per shipment. ranada shipped 3,000 units of product 1 in 1,200 shipments (some shipments are more than one unit). there were 150 returns. determine the total activity costs for the return and shipping activities of product 1.

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Parker Hinton · Answer 1

The total activity costs for the return and shipping activities of product 1 are -

Total activity costs for the return and shipping activities = (Per return costs X number of returns) + (Per shipping costs X number of shipments)

Total activity costs for the return and shipping activities = ($ 45 X 150 returns) X ($ 10 X 1,200 shipments)

Total activity costs for the return and shipping activities = $ 18,750