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:
$$\begin{array} { l r r }
\text { Cost driver } & \text { Customer C } & \text { Customer D } \
\text { Number of orders } & 18 & 8 \
\text { Number of deliveries } & 10 & 10 \
\text { Total number of items } & 2,000 & 4,000 \
\text { Annual order value } & \$ 120,000 &8 0 , 0 0 0
\end{array}$$
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What are the total delivery costs charged to Customer C during the year?
A) $5,344.
B) $5,364.
C) $6,900.
D) $6,964.

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:
$$\begin{array} { l r r } 
\text { Cost driver } & \text { Customer C } & \text { Customer D } \
\text { Number of orders } & 18 & 8 \
\text { Number of deliveries } & 10 & 10 \
\text { Total number of items } & 2,000 & 4,000 \
\text { Annual order value } & \$ 120,000 &8 0 , 0 0 0
\end{array}$$
-
What are the total delivery costs charged to Customer C during the year?
A) $5,344.
B) $5,364.
C) $6,900.
D) $6,964.

Quizplus · Accepted Answer

The total delivery cost for Customer C is calculated as follows:  - Number of orders: 18 orders x $8 = $144  - General delivery costs: 2% of $120,000 = $2,400  - Number of items: 2,000 items x $1.25 = $2,500  - Number of deliveries: 10 deliveries x $30 = $300  Total cost = $144 + $2,400 + $2,500 + $300 = $5,344

Republic Industries Decides to Price Delivery Services According to the Results