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Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and Individual home owners. One of the services AHC offers is delivery of
Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and Individual home owners. One of the services AHC offers is delivery of the purchased products to the customer's work site. Because not all customers take advantage of the delivery service option, ACH adds 10 percent to the cost of the products purchased to cover the delivery cost. A business Intern spent the summer at ACH. The Intern's assignment was to analyze the delivery service and recommend a better way to charge customers for using it. The intern, who had studied activity-based costing, identified the following activities and the data related to them: Activity Picking order Delivering order Handling complaints Total delivery cost Cost Driver Number of items Number of orders Annual Cost $321,640 Annual Driver Volume 365,500 items 850,500 29,440 31,500 orders 115 complaints Number of complaints $ 1,201,580 The Intern selected two customers, who were frequent customers, to use as an illustration of the system: Wagner Remodeling and Burlington Contractors. The intern collected the following information on these two customers for the most recent six months: Total order value (before delivery charge) Number of orders Total number of items Number of delivery complaints Wagner Remodeling $ 16,500 23 3421 1 Burlington Contractors $ 21,000 58 313 2 Required: a. What would the delivery charge for each customer be under the current policy of 10 percent of order value? b. What would the activity-based costing system estimate as the cost of delivering to each customer? Complete this question by entering your answers in the tabs below. Required A Required B What would the delivery charge for each customer be under the current policy of 10 percent of order value? Wagner Remodeling Burlington Contractors Delivery Charge Per Customer Required A Required B > Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and Individual home owners. One of the services AHC offers is delivery of the purchased products to the customer's work site. Because not all customers take advantage of the delivery service option, ACH adds 10 percent to the cost of the products purchased to cover the delivery cost. A business Intern spent the summer at ACH. The Intern's assignment was to analyze the delivery service and recommend a better way to charge customers for using it. The Intern, who had studied activity-based costing, identified the following activities and the data related to them: Activity Picking order Delivering order Handling complaints Total delivery cost Cost Driver Number of items Number of orders Number of complaints Annual Cost $ 321,640 850,500 29,440 Annual Driver Volume 365,500 items $ 1,201,580 31,500 orders 115 complaints The Intern selected two customers, who were frequent customers, to use as an illustration of the system: Wagner Remodeling and Burlington Contractors. The intern collected the following information on these two customers for the most recent six months. Number of orders Total number of items Total order value (before delivery charge) Number of delivery complaints Wagner Remodeling $ 16,500 23 342 1 Burlington Contractors $ 21,000 58 313 2 Required: a. What would the delivery charge for each customer be under the current policy of 10 percent of order value? b. What would the activity-based costing system estimate as the cost of delivering to each customer? Complete this question by entering your answers in the tabs below. Required A Required B What would the activity-based costing system estimate as the cost of delivering to each customer? Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar. Wagner Burlington Remodeling Contractors Picking order Delivering order Handling complaints Total cost
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