Republic Industries decides to price delivery service according to the results of a recent activity-based costing (ABC)study.The study indicates Republic should charge $8 per order,2% of the order's 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:
$$\begin{array} { | l | r | r | }
\hline \text { Cost driver } & \text { Customer C } & \text { Customer D } \
\hline \text { Number of orders } & 18 & 8 \
\hline \text { Number of deliveries } & 10 & 10 \
\hline \text { Number of items } & 2,000 & 4,000 \
\hline \text { Ordervalue } & \$ 120,000 & \$ 80,000 \
\hline
\end{array}$$
What are the total delivery costs charged to Customer C during the year?

Question

Republic Industries decides to price delivery service according to the results of a recent activity-based costing (ABC)study.The study indicates Republic should charge $8 per order,2% of the order's 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: 
$$\begin{array} { | l | r | r | } 
\hline \text { Cost driver } & \text { Customer C } & \text { Customer D } \
\hline \text { Number of orders } & 18 & 8 \
\hline \text { Number of deliveries } & 10 & 10 \
\hline \text { Number of items } & 2,000 & 4,000 \
\hline \text { Ordervalue } & \$ 120,000 & \$ 80,000 \
\hline
\end{array}$$
What are the total delivery costs charged to Customer C during the year?

Quizplus · Accepted Answer

The total delivery costs charged to Customer C during the year are $5,344. This is calculated as follows:$8 per order x 18 orders = $1442% of the order's value for general delivery costs x $120,000 = $2,400$1.25 per item x 2,000 items = $2,500$30 for delivery x 10 deliveries = $300Total delivery costs = $144 + $2,400 + $2,500 + $300 = $5,344

Republic Industries Decides to Price Delivery Service According to the Results