Question

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 $8 per order, 2% of annual order value for general delivery costs, $1.25 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 18 8 Number of deliveries 10 10 Total number of items 2,000 4,000 Annual order value $ 120,000 $ 80,000 What are the total delivery costs charged to Customer d during the year? $5,344. $5,364. $6,900. $6,964.

Answer 1

Answer: $6,964.

Explanation:

Charge $8 per order.

2% of annual order value is general delivery cost

$30 per delivery.

$1.25 per item

Customer D delivery cost

= (8 * 8) + (2% * 80,000) + (30 * 10) + (1.25 * 4,000)

= $6,964.