International Gems sells ﬁne jewelry 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.International 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: During the period, the Southern sales oﬃce generated 240 orders for a total of 3,560 items, which were shipped in 1,200 boxes.What amount of shipping department costs should be allocated to these sales?
A)$9,480
B)$5,040
C)$14,200
D)$18,328
E)None of the answer choices is correct.

Question

International Gems sells ﬁne jewelry 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.International 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:  During the period, the Southern sales oﬃce generated 240 orders for a total of 3,560 items, which were shipped in 1,200 boxes.What amount of shipping department costs should be allocated to these sales?
A)$9,480 
B)$5,040 
C)$14,200 
D)$18,328 
E)None of the answer choices is correct.

Quizplus · Accepted Answer

The Answer of International Gems sells ﬁne jewelry 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.International 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:  During the period, the Southern sales oﬃce generated 240 orders for a total of 3,560 items, which were shipped in 1,200 boxes.What amount of shipping department costs should be allocated to these sales?
A)$9,480 
B)$5,040 
C)$14,200 
D)$18,328 
E)None of the answer choices is correct.

International Gems Sells ﬁNe Jewelry and Has Implemented Activity-Based Costing