Questions: Shanghai Company sells glasses, fine china, and everyday dinnerware. It uses activity-based costing to determine the cost of the shipping and handling activity. The shipping and handling activity has an activity rate of 6 per pound. A box of glasses weighs 2 pounds, a box of fine china weighs 4 pounds, and a box of everyday dinnerware weighs 6 pounds. a Determine the shipping and handling activity cost to be allocated to each unit of product. Glasses Fine China Everyday dinnerware b Determine the total shipping and receiving costs to be allocated to the fine china if 5,300 boxes are shipped.

Solution Steps

To determine the shipping and handling cost per unit for each product, we use the formula:

\[ \text{Cost per unit} = \text{Weight (pounds)} \times \text{Activity rate per pound} \]

For glasses: \[ \text{Cost per unit (Glasses)} = 2 \, \text{pounds} \times 6 \, \text{dollars/pound} = 12 \, \text{dollars} \]

For fine china: \[ \text{Cost per unit (Fine China)} = 4 \, \text{pounds} \times 6 \, \text{dollars/pound} = 24 \, \text{dollars} \]

For everyday dinnerware: \[ \text{Cost per unit (Everyday Dinnerware)} = 6 \, \text{pounds} \times 6 \, \text{dollars/pound} = 36 \, \text{dollars} \]

To find the total shipping and handling cost for fine china when 5,300 boxes are shipped, we use the formula:

\[ \text{Total Cost} = \text{Cost per unit} \times \text{Number of boxes} \]

For fine china: \[ \text{Total Cost (Fine China)} = 24 \, \text{dollars} \times 5300 = 127200 \, \text{dollars} \]

Final Answer