Question :
Ritz Company sells fine collectible statuses and has implemented activity-based costing. Costs in the shipping department have been divided into three costs pools.
The first cost pool contains costs that are related to packaging and shipping and Rand has determinded 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 used for general operations and supervision of the department and the cost driver is the number of shipments.
Information about the department is summarized below:
| Cost pool |
Total costs |
Cost Driver |
Annual activity |
| Packaging and shipping |
$160,200 Number of boxes shipped |
|
23,300 boxes |
| Final inspection |
$197,900 Number of individual items shipped |
|
97,400 |
| General operations and supervision |
80,700 Number of orders |
|
9,500 orders |
During the period, the Far East sales office generated 692 orders for a total of 6,060 items. These orders were shipped in 1,300 boxes.
What amount of shipping department costs should be allocated to these sales?