Problem 1: Activity-Based Costing of Customers (10 points): Karin's Kitchen Supply delivers restaurant supplies throughout the city

Problem 1: Activity-Based Costing of Customers (10 points):

Karin's Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10% 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:

Activity                         Cost Driver                Cost           Driver Volume

Processing order              # of orders                $84,000.        6,000 orders

Loading truck                  #of items                  165,000.     110,000 orders

Delivery                       # of orders                  96,000.        6,000 orders

Invoicing                      # of invoices                75,600         4,200 invoices

Two of Karin's customers are Papa Henry and Sweet and Sour Chicken. Data for orders and deliveries to these two customers follow:

                                 Papa Henry              Sweet and Sour Chicken

Order value                    $85,000                     $98,000

Number of orders                    64                          125

Number of items                   725                       1,700

Number of invoices                  15                         160

Calculate the activity-based costing system estimate as the cost of delivery to each customer.