Exercise 5-35 Page 204:
1. Prepare a schedule showing Redwood Company’s total selling cost for each order size and the per-skein selling cost within each order size.
Redwood Company
Selling Costs Computation by Order Size and Skein within Each Order Size
| Order Size | ||||
| Small | Medium | Large | Total | |
| Sales CommissionsA[Unit Cost: $675,000/225,000 = $3.00 Per Box] | $6,000 | $135,000 | $534,000 | $675,000 |
| CatalogsB [Unit Cost: $295,400/590,800 =$0.50 Per Catalog | 127,150 | 105,650 | 62,600 | 295,400 |
| Costs of Catalog SalesC [Unit Cost: $105,000/175,000 = $0.60 Per Skein] | 47,400 | 31,200 | 26,400 | 105,000 |
| Credit and CollectionD [Unit Cost: $60,000/6,000 = $10 Per Order | 4,850 | 24,150 | 31,000 | 60,000 |
| Total Cost Per Order Size | $185,400 | $296,000 | $854,000 | $1,135,400 |
| Units [Skeins] SoldE | 103,000 | 592,000 | 2,180,000 | |
| Unit Cost Per Order SizeE | $1.80 | $0.50 | $0.30 |
A Retail Sales in Boxes x Unit Cost:
Small: 2,000 x $3
Medium: 45,000 x $3
Large: 178,000 x $3
B Catalogs Distributed x Unit Cost
C Catalog Sales x Unit Cost
D Number of Retail Orders x Unit Cost
E Small: [2,000 x 12] + 79,000 = 103,000
Medium: [45,000 x 12] + 52,000 = 592,000
Large: [178,000 x 12] + 44,000 = 2,180,000
Total Cost Per Order Size ÷ Units Sold