Republic Industries decides to price delivery services according to the results of a recent activity-based costing...
Republic Industries decides to price delivery services according to the results of a recent activity-based costing (ABC) study. The study indicates Republic should charge $9 per order, 3% of annual order value for general delivery costs, $1.20 per item, and $30 for delivery.
A year later, Republic collected the following information for two of its best customers:
| Cost driver | Customer C | Customer D | |||||
| Number of orders | 16 | 9 | |||||
| Number of deliveries | 10 | 10 | |||||
| Total number of items | 2,700 | 5,400 | |||||
| Annual order value | $ | 145,000 | $ | 70,000 | |||
What are the total delivery costs charged to Customer D during the year?
-
$6,861.
-
$8,961.
-
$8,034.
-
$8,880.
Homework Answers
Correct answer will be $8961
Detail Working for your refrence
| No. of Activity | Activity Rate | Allocated Cost (AXB) | |||
| Order cost | 9 | No. of Order | $9.00 | No. of Order | $81.00 |
| General delivery costs | 10 | No. of Delivery | $30.00 | No. of Delivery | $300.00 |
| Item cost | 5400 | No. of item | $1.20 | No. of item | $6,480.00 |
| Delivery charges | 70000 | Annual Order Value | 3.00% | Annual Order Value | $2,100.00 |
| Total delivery cost | $8,961.00 | ||||
| Let me know if any doubt Kindly mark with positive rating it would help me lot. Thanks in advance. |
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more management accountants working closely with department
managers. To date the teams have mainly focused on product costing.
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profitability. One team has looked at distribution costs and the
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