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Marvins Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10 percent to the cost of the supplies to cover the delivery cost.

Marvins 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 Cost Driver Cost Driver Volume Processing order Number of orders $ 84,000 7,000 orders Loading truck Number of items 217,000 155,000 items Delivering merchandise Number of orders 105,000 7,000 orders Processing invoice Number of invoices 90,000 6,000 invoices Total overhead $ 496,000 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 Order value $ 80,000 $ 90,000 Number of orders 60 220 Number of items 600 1,000 Number of invoices 14 120 Required: a. What would the delivery charge for each customer be under the current policy of 10 percent of order value? 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.

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