Republic Industries decides to price delivery services according to the results of a recent activity-based costing...
Republic Industries decides to price delivery services according to the results of a recent activity-based costing (ABC) study. The study indicates Republic should charge $7 per order, 2% of annual order value for general delivery costs, $1.40 per item, and $20 for delivery.
A year later, Republic collected the following information for two of its best customers:
| Cost driver | Customer C | Customer D | |||||
| Number of orders | 19 | 7 | |||||
| Number of deliveries | 10 | 10 | |||||
| Total number of items | 2,500 | 5,000 | |||||
| Annual order value | $ | 135,000 | $ | 90,000 | |||
What are the total delivery costs charged to Customer C during the year?
-
$6,533.
-
$9,049.
-
$7,249.
-
$9,000.
Homework Answers
The answer for above question is ($)6,533
The total delivery costs charged to customer C is ($) 6533
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Republic Industries decides to price delivery services according
to the results of a recent activity-based costing...
Republic Industries decides to price delivery services according to the results of a recent activity-based costing...
Republic Industries decides to price delivery services according to the results of a recent activity-based costing (ABC) study. The study indicates Republic should charge $9 per order, 3% of annual order value for general delivery costs, $1.20 per item, and $30 for delivery. A year later, Republic collected the following information for two of its best customers: Cost driver Customer C Customer D Number of orders 16 9 Number of deliveries 10 10 Total number of items 2,700 5,400 Annual...
Republic Industries decides to price delivery services according to the results of a recent activity-based costing...
Republic Industries decides to price delivery services according to the results of a recent activity-based costing (ABC) study. The study indicates Republic should charge $8 per order, 2 % of annual order value for general delivery costs, $1.25 per item, and $30 for delivery. A year later, Republic collected the following information for two of its best customers: Cost driver Customer C Customer D Number of orders 18 8 Number of deliveries Total number of items Annual order value 10...
Accounting 305 CASE 1 Sarif Industries Activity-Based Costing (ABC) Quantum TM manufactures electronic testing and measurement...
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Recently two teams have been set up to collect data to improve the
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Republic Industries decides to price delivery services according to the results of a recent activity-based costing (ABC) study. The study indicates Republic should charge $8 per order, 2 % of annual order value for general delivery costs, $1.25 per item, and $30 for delivery. A year later, Republic collected the following information for two of its best customers: Cost driver Customer C Customer D Number of orders 18 8 Number of deliveries Total number of items Annual order value 10...
Accounting 305 CASE 1 Sarif Industries Activity-Based Costing (ABC) Quantum TM manufactures electronic testing and measurement instruments. Many products are custom-designed with recent orders for function generators, harmonic analyzers, logic analyzers, temperature measurement instruments, and data-logging instruments. The company prices its instruments at 30 percent over estimated cost (excluding administrative and selling costs). Recently, senior management has noted that its product mix has changed. Specifically, the company is receiving fewer large orders for instruments that are relatively simple to produce,...
b. Genie Corner Stores operates aleancity and decides to apply ABC analysis to three product lines: baked goods. milk and fruit juice and frozen foods. Total store and supporting costs (indirect/overhead costs) are $37,760. These indirect/overhead costs are identified in the following activities (cost pools) and their respective cost drivers Activity Total cost Cost driver Ordering Delivery Shelf-stocking Customer support Total $ 7.890 $ 17, 445 $ 5.640 $6785 $37, 760 Number of purchase orders Number of deliveries Number of...
Managers at Aiwa Co. have been using various teams to collect
activity-based data since 2000. Each team has consisted of one or
more management accountants working closely with department
managers. To date the teams have mainly focused on product costing.
Recently two teams have been set up to collect data to improve the
company’s understanding of customer-related costs and
profitability. One team has looked at distribution costs and the
second at order related costs. The company has approximately 250
customers...
5. Peter Company has the following pools, drivers and pool rates for its activity-based costing system: Pool Driver Rate Machining Machine Hours $60 per machine hour Ordering of Parts Number of Orders $180 per order Design Design Hours $600 per design hour Customer Customers $2,200 per customer Other n/a n/a Becca Company placed an order with Peter for 1,800 units of a custom product. The order required $90,000 worth of direct material and $36,000 worth of direct labor. The order...
Exercise 4-9 Compute and Use Activity Rates to Determine the Costs of Serving Customers (L04-2, LO4-3] Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospitals. In the face of declining profits, Med Max decided to implement an activity-based costing system to improve its understanding of the costs incurred to serve each hospital. The company broke its selling and administrative expenses into four activities as shown below: Activity Cost...
. CHAPTER 5 ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT Required Under its simple costing system, FS allocated support costs to products at the rate of 30% of cost of goods sold. 1. Use the simple costing system to prepare a product-line profitability report for FS. 2. Use the ABC system to prepare a product-line profitability report for FS. 3. What new insights does the ABC system in requirement 2 provide to FS managers? 5-25 ABC, wholesale, customer profitability. Ramirez Wholesalers operates...
Garner Industries manufactures precision tools. The firm uses an activity-based costing system. CEO Deb Garner is very proud of the accuracy of the system in determining product costs. She noticed that since the installment of the ABC system 10 years earlier, the firm had become much more competitive in all aspects of the business and earned an increasing amount of profits every year. In the last two years, the firm sold 1 million units to 4,100 customers each year. The...
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