Ranada Company manufactures and sells sportswear products. Ranada uses activity-
ID: 2337745 • Letter: R
Question
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 per-unit customer costs for combined shipping and returns of Product 1 O a. $24.75 per unit O b. $2.25 per unit c.$6.25 per unit d. $55 per unitExplanation / Answer
The answer is c.
Explanation
1. Total customer return processing activity cost
Customer return processing activity rate = $45 per return
Total number of returns = 150 returns
Total cutomer return processing activity cost for 150 returns = 150 returns x $45 per return = $6,750
2. Total shopping activity cost
Shipping activity rate = $10 per shipment
Total number of shipments = 1,200 shipments
Total shipping activity cost for 1,200 shipments = 1,200 shipments x $10 per shipment = $12,000
Shipping activity cost for 150
3. Total cost
Total cost = Total cutomer return processing activity cost + Total shipping activity cost
Total customer costs for combined shipping and returns of product 1 = $6,750 + $12,000 = $18,750
Number of units shipped = 3000 units
Per unit customer costs for combined shipping and returns of product 1 = $18,750 ÷ 3000 units
Per unit customer costs for combined shipping and returns of product 1 = $6.25 per unit
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.