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Rupert's Appliance Warehouse (RAW) delivers appliances to retailers throughout the city. The firm adds 6 percent to the cost of the appliances to cover
Rupert's Appliance Warehouse (RAW) delivers appliances to retailers throughout the city. The firm adds 6 percent to the cost of the appliances to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. The finance team at RAW has analyzed the delivery service using activity-based costing methods and identified four activities. Data on these activities follow: Activity Processing order Loading truck Delivering order Billing Total overhead Cost Driver Number of orders Number of items Number of orders. Number of invoices Activity Cost $ 126,000 Cost Driver Volume 9,000 orders 160,000 items 9,000 orders 8,000 invoices 272,000 153,000 136,000 $ 687,000 Two of Rupert's customers are McLean Designs and Neveux Appliances. Data for orders and deliveries to these two customers follow: McLean Designs Neveux Appliances $ 89,000 $ 99,000 69 266 600 13 1,900 210 Order value (total) Number of orders Total number of items Number of invoices Required: a. What would the delivery charge for each customer be under the current policy of 6 percent of order value?
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