Question

Last year, Stevita Inc. shipped 3,000,000 kilograms of goods to customers at a cost of $2,400,000. If an individual customer orders 20,000 kilograms and produces $400,000 of revenue (total revenue is $40 million), the amount of shipping cost assigned to the customer using activity-based costing would be

Answer 1

$16,000

Step-by-step explanation:

Overhead Rate = Cost of goods shipped ÷ Kilograms of goods

= $2,400,000 ÷ 3,000,000

= $0.80 per kilogram

Applied Overhead = Overhead Rate × Order by a individual customer

= $0.80 × 20,000 Kg

= $16,000

Therefore, the amount of shipping cost assigned to the customer using activity- based costing would be $16,000.