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 $ 90,000 120,000 108,000 90,000 Cost Driver Volume 6,000 orders 80,000 items 6,000 orders 5,000 invoices $ 408,000 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 Order value (total) Number of orders Total number of items Number of invoices Required: $ 73,000 $ 83,000 53 106 1,300 100 560 13 a. What would the delivery charge for each customer be under the current policy of 6 percent of order value? b. What would the activity-based costing system estimate as the cost of delivering to each customer? Complete this question by entering your answers in the tabs below. Required A Required B What would the delivery charge for each customer be under the current policy of 6 percent of order value? Delivery Charge Per Customer McLean Designs Novoux Annlinnene

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Manji 

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
$ 90,000
120,000
108,000
90,000
Cost Driver Volume
6,000 orders
80,000 items
6,000 orders
5,000 invoices
$ 408,000
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
Order value (total)
Number of orders
Total number of items
Number of invoices
Required:
$ 73,000
$ 83,000
53
106
1,300
100
560
13
a. What would the delivery charge for each customer be under the current policy of 6 percent of order value?
b. What would the activity-based costing system estimate as the cost of delivering to each customer?
Complete this question by entering your answers in the tabs below.
Required A
Required B
What would the delivery charge for each customer be under the current policy of 6 percent of order value?
Delivery Charge
Per Customer
McLean Designs
Novoux Annlinnene
Transcribed Image Text: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 $ 90,000 120,000 108,000 90,000 Cost Driver Volume 6,000 orders 80,000 items 6,000 orders 5,000 invoices $ 408,000 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 Order value (total) Number of orders Total number of items Number of invoices Required: $ 73,000 $ 83,000 53 106 1,300 100 560 13 a. What would the delivery charge for each customer be under the current policy of 6 percent of order value? b. What would the activity-based costing system estimate as the cost of delivering to each customer? Complete this question by entering your answers in the tabs below. Required A Required B What would the delivery charge for each customer be under the current policy of 6 percent of order value? Delivery Charge Per Customer McLean Designs Novoux Annlinnene
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