Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some of the items are manufactured by TCC, while others are purchased for resale. For the products it manufactures, the company currently bases its selling prices on a product-costing system that accounts for direct material, direct labor, and the associated overhead costs. In addition to these product costs, TCC incurs substantial selling costs, and Roger Jackson, controller, has suggested that these selling costs should be included in the product pricing structure. After studying the costs incurred over the past two years for one of its products, skeins of knitting yarn, Jackson has selected four categories of selling costs and chosen cost drivers for each of these costs. The selling costs actually incurred during the past year and the cost drivers are as follows: Cost Category Sales commissions Pay-per-click/Search engine optimization Cost of online sales Credit and collection Total selling costs The knitting yarn is sold to retail outlets in boxes, each containing 12 skeins of yarn. The sale of partial boxes is not permitted. Commissions are paid on sales to retail outlets but not on online sales. The cost of online sales includes technology infrastructure costs and the wages of personnel who process the online orders. Jackson believes that the selling costs vary significantly with the size of the order. Order sizes are divided into three categories as follows: Order Size Small Medium Large Cost Driver Amount $ 829,500 Boxes of yarn sold to retail stores 313,000 Number of online leads 149,600 Skeins sold online 79,200 Number of retail orders $ 1,371,300 Online Sales 1 to 10 skeins 11 to 20 skeins Over 20 skeins Retail Sales boxes 1 to 10 11 to 20 boxes Over 20 boxes An analysis of the previous year's records produced the following statistics.
Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some of the items are manufactured by TCC, while others are purchased for resale. For the products it manufactures, the company currently bases its selling prices on a product-costing system that accounts for direct material, direct labor, and the associated overhead costs. In addition to these product costs, TCC incurs substantial selling costs, and Roger Jackson, controller, has suggested that these selling costs should be included in the product pricing structure. After studying the costs incurred over the past two years for one of its products, skeins of knitting yarn, Jackson has selected four categories of selling costs and chosen cost drivers for each of these costs. The selling costs actually incurred during the past year and the cost drivers are as follows: Cost Category Sales commissions Pay-per-click/Search engine optimization Cost of online sales Credit and collection Total selling costs The knitting yarn is sold to retail outlets in boxes, each containing 12 skeins of yarn. The sale of partial boxes is not permitted. Commissions are paid on sales to retail outlets but not on online sales. The cost of online sales includes technology infrastructure costs and the wages of personnel who process the online orders. Jackson believes that the selling costs vary significantly with the size of the order. Order sizes are divided into three categories as follows: Order Size Small Medium Large Cost Driver Amount $ 829,500 Boxes of yarn sold to retail stores 313,000 Number of online leads 149,600 Skeins sold online 79,200 Number of retail orders $ 1,371,300 Online Sales 1 to 10 skeins 11 to 20 skeins Over 20 skeins Retail Sales boxes 1 to 10 11 to 20 boxes Over 20 boxes An analysis of the previous year's records produced the following statistics.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter1: Introduction To Managerial Accounting
Section: Chapter Questions
Problem 4E: For apparel manufacturer Abercrombie Fitch, Inc. (ANF), classify each of the following costs as...
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create a schedule showing TCC’s total selling cost for each order size and the per-skein selling cost within each order size
Transcribed Image Text:Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online sites such as Etsy.com. Some of the items
are manufactured by TCC, while others are purchased for resale. For the products it manufactures, the company currently bases its
selling prices on a product-costing system that accounts for direct material, direct labor, and the associated overhead costs. In addition
to these product costs, TCC incurs substantial selling costs, and Roger Jackson, controller, has suggested that these selling costs
should be included in the product pricing structure.
After studying the costs incurred over the past two years for one of its products, skeins of knitting yarn, Jackson has selected four
categories of selling costs and chosen cost drivers for each of these costs. The selling costs actually incurred during the past year and
the cost drivers are as follows:
Cost Category
Sales commissions
Pay-per-click/Search engine optimization
Cost of online sales
Credit and collection
Total selling costs
Amount
Cost Driver
$ 829,500 Boxes of yarn sold to retail stores
313,000 Number of online leads
Skeins sold online
149,600
79,200
$ 1,371,300
Number of retail orders
The knitting yarn is sold to retail outlets in boxes, each containing 12 skeins of yarn. The sale of partial boxes is not permitted.
Commissions are paid on sales to retail outlets but not on online sales. The cost of online sales includes technology infrastructure
costs and the wages of personnel who process the online orders. Jackson believes that the selling costs vary significantly with the size
of the order. Order sizes are divided into three categories as follows:
Order Size
Small
Medium
Large
Retail Sales
1 to boxes
Online Sales
1 to 10 skeins
11 to 20 skeins
Over 20 skeins
11 to 20 boxes
Over 20 boxes
An analysis of the previous year's records produced the following statistics.
Transcribed Image Text:Items
Retail sales boxes (12 skeins per box)
Online sales, skeins
Number of retail orders
Number of online leads
Small
4,000
83,000
525
273,050
Sales commissions
Pay-per-click/Search engine optimization
Cost of online sales
Credit and collection
Total cost for all orders of a given size
Units (skeins) sold
Unit cost per order of a given size
Order Size
Medium
51,000
56,000
2,615
230, 670
Small
TEXTILE CRAFT COMPANY
Computation of Selling Costs
By Order Size and Per Skein Within Each Order Size
Required:
1. Prepare a schedule showing TCC's total selling cost for each order size and the per-skein selling cost within each order size.
Note: Round your intermediate calculations and unit cost per order to 2 decimal places.
0
Large
182,000
48,000
4,060
122, 280
GA
Order Size
Medium
Total
237,000
187,000
0
7,200
626,000
Large
0
$
SA
Total
0
0
0
0
0
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