Unique Finds Sells Fine Collectible Statues and Has Implemented Activity-Based

question 14

Multiple Choice

Unique Finds sells fine collectible statues and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping. Unique has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected. The final cost pool is used for general operations of the department and the cost driver is the number of orders. Information about the activities is summarized below:
$\begin{array}{|l|c|c|c|}\hline\text { Cost Pool } & \begin{array}{c}\text { Estimated } \\\text { Total Costs }\end{array} & \text { Cost Driver } & \text { Estimated } \\&&&\text { Annual Activity }\\\hline \text { Packaging and shipping } & \$ 67,200 & \text { Number of boxes shipped } & 16,000 \text { boxes } \\\hline \text { Final inspection } & 200,000 & \text { Number of individual items inspected } & 100,000 \text { items } \\\hline \text { General operations } & 85,000 & \text { Number of orders } & 10,000 \text { orders } \\\hline\end{array}$
An order is shipped to a retail customer who has ordered 6 individual items. This order will be shipped in 3 separate boxes. What is the packing and shipping cost that will be allocated to the order?

• A) $4.20
• B) $4.03
• C) $25.20
• D) $12.60

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Definitions:

Public Transportation

A system of vehicles such as buses, trains, and subways, provided by the government or private companies, for the purpose of transporting large numbers of people.

Cross-price Elasticity

Measures the responsiveness of the demand for one good to a change in the price of another good.

Grape Harvest

The process of collecting grapes from the vineyards, usually seasonal and significant for wine production.

Peanut Butter

A spread made from ground, dry-roasted peanuts, often mixed with ingredients like salt, sweeteners, or emulsifiers.