Marvin\'s Kitchen Supply delivers restaurant supplies throughout the city. The f

Question

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 Cost Driver Driver Volume 9,000 orders Processing Loading truck Delivering merchandise Processing invoice Number of orders Number of items Number of orders Number f invoices $126,000 264,000 153,000 136,000 5679,000 165,000 items 9,000 orders 8,000 invoices Total overhead Two of Marvin's customers are City Diner and Le Chien Chaud. Data for orders and deliveries to these two customers follow Order value Number of orders Number of items Number of invoices 582.000 62 700 10 $92,000 240 1200 140 Required a. What would the delivery charge for each customer be under the current policy of 10 percent of order value? City Diner Le Chien Chaud b. 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.) Diner Processing order Loading truck Processing invoice Total cost

Explanation / Answer

Solution a:

Solution b:

Computation of delivery charge - Marvin Kitchen Supply Particulars City Diner Le Chien Chaud Order value $82,000.00 $92,000.00 Delivery charge $8,200.00 $9,200.00

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