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 Cost Driver Cost Driver Volume Processing order Number of orders $ 65,000 5,000 orders Loading truck Number of items 342,000 100,000 items Delivering merchandise Number of orders 80,000 5,000 orders Processing invoice Number of invoices 64,000 4,000 invoices Total overhead
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 Cost Driver Cost Driver Volume
Processing order Number of orders $ 65,000 5,000 orders
Loading truck Number of items 342,000 100,000 items
Delivering merchandise Number of orders 80,000 5,000 orders
Processing invoice Number of invoices 64,000 4,000 invoices
Total
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 $85,000 $95,000
Number of orders 65 270
Number of items 850 1,500
Number of invoices 13 170
Required:
- 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 ________________
- 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 $ 0
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