Shanghai Company sells glasses, fine china, and everyday dinnerware. It uses activity-based costing to determine the cost of the shipping and handling activity. The shipping and handling activity has an activity rate of $7 per pound. A box of glasses weighs 2 pounds, a box of fine china weighs 4 pounds, and a box of everyday dinnerware weighs 6 pounds.

Question continuation

(a) Determine the shipping and handling activity for each product and

(b) determine the total shipping and receiving costs for the china if 3,500 boxes are shipped.

Answer:

(a)

For Glass = $14

For Fine China = $28

For Everyday dinner = $42

(b) $28 * 3,500 = $98,000

Step-by-step explanation:

Given

Shipping and Handling Activity = $7 per pound

Box of glass = 2 pounds

Box of fine China = 4 pounds

Box of everyday dinner = 6 pounds

a.

Shipping and Handling Activity

For Glass = $7 * 2

For Glass = $14

For Fine China = $7 * 4

For Fine China = $28

For Everyday dinner = $7 * 6

For Everyday dinner = $42

b.

Total Shipping and Receiving cost for Fine China

If the shipping and receiving cost of a box of fine China is $28

Then, the shipping and receiving cost of 3500 boxes is

= 3,500 * $28

= $98,000