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Marvin's Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10 percent to the cost of the supplies to cover the delivery cost.
Marvin's Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10 percent to the cost of the supplies to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. A consultant has analyzed the delivery service using activity-based costing methods and identified four activities. Data on these activities follow: Cost Driver Volume Activity Processing order Loading truck Delivering merchandise Processing invoice Cost Driver Cost 84,000 370,000 102,000 85,000 $641,000 Driver Volume 6,000 orders Number of orders Number of items Number of orders Number of invoices 185,000 items 6,000 orders 5,000 invoices Total overhead Two of Marvin's customers are City Diner and Le Chien Chaud. Data for orders and deliveries to these two customers follow: City Diner Le Chien Chaud $86,000 $96,000 Order value Number of orders Number of items Number of invoices 280 1,600 180 900 14 Required a. What would the delivery charge for each customer be under the current policy of 10 percent of order value? Delivery Charge Per Customer City Diner Le Chien Chaud b. Calculate the cost of each activity for both restaurants to determine the total activity-based costing estimate of the cost of delivering to each customer. (Do not round intermediate calculations.) City Diner Le Chien Chaud Processing order Loading truck Delivering merchandise Processing invoice Total cost 0
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