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 135,000 items Activity Cost $ 48,000 243,000 60,000 Cost Driver Volume 4,000 orders 45,000 4,000 orders 3,000 invoices $ 396,000 Two of Rupert's customers are McLean Designs and Neveux Appliances. Data for orders and deliveries to these two customers foll McLean Designs Neveux Appliances Order value (total) Number of orders Total number of items Number of invoices Required: $ 84,000 64 800 12 $ 94,000 216 1,400 160 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 $ 5,040 Neveux Appliances $ 5,640 < Required A Required B >

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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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
135,000 items
Activity Cost
$ 48,000
243,000
60,000
Cost Driver Volume
4,000 orders
45,000
4,000 orders
3,000 invoices
$ 396,000
Two of Rupert's customers are McLean Designs and Neveux Appliances. Data for orders and deliveries to these two customers foll
McLean
Designs
Neveux
Appliances
Order value (total)
Number of orders
Total number of items
Number of invoices
Required:
$ 84,000
64
800
12
$ 94,000
216
1,400
160
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
$
5,040
Neveux Appliances
$
5,640
< Required A
Required B >
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 135,000 items Activity Cost $ 48,000 243,000 60,000 Cost Driver Volume 4,000 orders 45,000 4,000 orders 3,000 invoices $ 396,000 Two of Rupert's customers are McLean Designs and Neveux Appliances. Data for orders and deliveries to these two customers foll McLean Designs Neveux Appliances Order value (total) Number of orders Total number of items Number of invoices Required: $ 84,000 64 800 12 $ 94,000 216 1,400 160 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 $ 5,040 Neveux Appliances $ 5,640 < Required A Required B >
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