Product Costs using Activity Rates Elegant Occasions Inc sel

Product Costs using Activity Rates

Elegant Occasions Inc. sells china and flatware over the Internet. For the next period, the budgeted cost of the sales order processing activity is $194,400, and 16,200 sales orders are estimated to be processed.

a. Determine the activity rate of the sales order processing activity.
$_________ per sales order

b. Determine the amount of sales order processing cost that Elegant Occasions would receive if it had 9,200 sales orders.
$__________

Solution

a Activity rate = 194400/16200= $12 per sales order b Amount of sales order processing cost = 9200*12= $110400