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Express Travel decides to price delivery services according to the results of a recent activity-Isased costing (ABC) study
Express Travel decides to price delivery services according to the results of a recent activity-Isased costing (ABC) study. The study indicates Express Travel should charge $20 per order, 1% of annual order value for general delivery costs, $1.60 per Bern, and $30 for delivery.
A year later, Express Travel collected the following information for three of its customers:
Cost driver Customer A Customer B Customer C Number of orders 31 21 25 Number of deliveries 10 10 20 Total number of items 3,000 5,000 13,000 Annual order value $133,000 $93,000 $113,000
What are the total delivery costs charged to Customer A during the year,
Expert Solution
Delivery Cost =Charges per order *Number of orders +delivery cost % *Order Value +Per item cost* Number of items +Delivery cost * Number of deliveries
Delivery Cost = $20 * 31 + 1% * $133,000 + $1.60 * 3,000 + $30 * 10
Delivery Cost = $620 + $1,330 + $4,800 + $300
Delivery Cost = $7050
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