1 answer

Product Costs using Activity Rates Nozama.com Inc. sells consumer electronics over the Internet. For the next...

Question:

Product Costs using Activity Rates

Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is $138,600, and 19,800 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 Nozama.com would receive if it had 11,300 sales orders.
$


Answers

a. Activity rate = $138,600 / 19800 = $7 per sales order

b. Sales order processing cost = 11300 x $7 = $79100

.

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