This year, Lambert Company will ship 1,500,000 pounds of goods to customers at a cost of...
This year, Lambert Company will ship 1,500,000 pounds of goods to customers at a cost of $1,200,000. If a customer orders 10,000 pounds and produces $200,000 of revenue (total revenue is $20 million), the amount of shipping cost assigned to the customer by using ABC would be
a. unable to be determined. b. $8,000 ($0.80 per pound shipped). c. $24,000 (2% of the shipping cost). d. $12,000 (1% of the shipping cost). e. None of these.
Homework Answers
Shipping cost assigned to customer
shipping cost per pound = $1200000/1500000=0.8 per pound
No of pound shipped= 10000
Shipping cost = 0.8*10000=$8000
Answer b.
In activity based costing Overhead allocate on the basis of cost driver .In this case cost driver is no of pounds shipped.
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This year, Lambert Company will ship 1,500,000 pounds of goods
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