Cost 7 - Driver Cost Processing order. .....................

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
10.23. Activity-Based Costing of Customers: Marvin’s Kitchen Supply. a. Delivery cost based on order value: Customer Order Value Delivery Charge (@10%) City Diner. ................................................ $50,000 $5,000 Le Chien Chaud. ................................... $60,000 6,000 b. Delivery cost based on activity-based costing: Cost driver rates: Activity Cost Driver Cost ÷ Driver Volume = Rate Processing order. . Number of orders $50,000 ÷ 5,000 orders = $10 per order Loading truck. ....... Number of items 100,000 ÷ 100,000 items = $1 per item Delivering merchandise. ........ Number of orders 60,000 ÷ 5,000 orders = $12 per order Processing invoice Number of invoices 48,000 ÷ 4,000 invoices = $12 per invoice Cost of delivery: City Diner Le Chien Chaud Activity Units of Cost Driver Cost Units of Cost
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Driver Cost Processing order. .................. 52 orders $520a 110 orders $1,100 Loading truck. ........................ 600 items 600b 1,500 items 1,500 Delivering merchandise. ........ 52 orders 624c 110 orders 1,320 Processing invoice. ................ 12 invoices 144 d 150 invoices 1,800 Total cost. ............................ $1,888 $5,720 a $520 = 52 orders x $10 per order. b $600 = 600 items x $1 per item. c $624 = 52 orders x $12 per order. d $144 = 12 invoices x $12 per invoice. c. Marvins can use this information to change the way they price delivery service. They can also use the information to work with customers to change the way they (customers) order to reduce the costs of order and delivery....
View Full Document

This note was uploaded on 12/09/2011 for the course COST ACCOU 101 taught by Professor Dennis during the Spring '11 term at Post.

Ask a homework question - tutors are online