edugen wileyplus.com WleyPLUS LUS Weyaandt, Financial & Managerial Accounting, 2

Question

edugen wileyplus.com WleyPLUS LUS Weyaandt, Financial & Managerial Accounting, 2e PRINTER VERSION BACK Exercise 18-10 (Part Level Submission) Kragan Clothing Company While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in assigning its seling costs to its product lines. Seling costs have traditionally been assigned to Kragan's product ines at a rate of 70% of dreef materials costs, its manufactures its own designed and labeled athletic wear and sells its products through cetaliog sales and retail outiets direct materials costs for the month of March for activity-based costing to its seling costs. Data relating to the "high-intensity" ine of products for the month of March are as follows Kragan's "high-intensity" ine of athletic wear are $394,000, The company has decided to extend Number of Cost Drivers Part Activity Cost Pools Cost Drivers Used per Activity Dolar sales $ 0.05 per dollar sales $300 per minute 915,000 y StudyAdvertising-Internet Column inches 0 $10 per column inch $2.50 per catalog Catalogn Cost of catalog sales Catalog orders Credit and collection Dollar sales 2,000 62,400 700 915.000 Catalogs mailed 1 per catalog order s0.03 per oolar sares (a) Your answer is correct. Compute the selling costs to be assigned to the high-intensity ne of achilatic wear far the menth of Marct (12 uisg the traditional preduct costing system tdirea mater as cost the ost·nver," and (2) usra actverbased costi Seling cost to be assigned

Explanation / Answer

Selling costs assigned under traditional costing = 394000*70% = $      2,75,800 Answer Selling costs assigned under ABC: Sales commissions = 0.05*915000 = $          45,750 Advertising-TV = 300*200 = $          60,000 Advertising--Internet = 10*2000 = $          20,000 Catalogs = 2.5*62400 = $      1,56,000 Cost of catalog sales = 1*8700 = $            8,700 Credit and collection = 0.03*915000 = $          27,450 Total selling costs under ABC $      3,17,900 Answer The traditional costing system undercosts the high intensity product line by = 317900-275800 = $          42,100 Answer

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.