Marvin's Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10 percent to the cost of the supplies to coverthe 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.三Cost Driver VolumeActivityProcessing orderLoading truckDelivering merchandiseProcessing invoiceCost$ 60,000266,00072,000Driver Volume4,000 orders140,000 items4,000 orders3,000 invoicesCost DriverNumber of ordersNumber of itemsNumber of ordersNumber of invoices54,000Total overhead$452,000Two of Marvin's customers are City Diner and Le Chien Chaud. Data for orders and deliveries to these two customers follow.City Diner$77,000Le Chien ChaudOrder value$87,000Number of orders57190Number of itemsNumber of invoices4502,30011230Required: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

a) Calculation of delivery charges is as follows: Resultant table:

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 Driver Volume Activity Processing order Loading truck Delivering merchandise Processing invoice Cost Driver Cost $ 60,000 266,000 72,000 54,000 Number of orders 4,000 orders 140,000 items 4,000 orders 3,000 invoices Number of items Number of orders Number of invoices Total overhead $452,000 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 $77,000 Order value Number of orders Number of items $87,000 57 190 2,300 230 450 Number of invoices 11 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

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 Driver Volume Activity Processing order Loading truck Delivering merchandise Processing invoice Cost Driver Cost $ 60,000 266,000 72,000 54,000 Number of orders 4,000 orders 140,000 items 4,000 orders 3,000 invoices Number of items Number of orders Number of invoices Total overhead $452,000 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 $77,000 Order value Number of orders Number of items $87,000 57 190 2,300 230 450 Number of invoices 11 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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