Express Travel decides to price delivery service according to the results of a recent activity-based...
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Accounting
Express Travel decides to price delivery service according to the results of a recent activity-based costing (ABC) study. The study indicates Express Travel should charge $16 per order, 1% of the order's value for general delivery costs, $2.50 per item, and $45 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
18
8
12
Number of deliveries
10
10
24
Number of items
2,000
4,000
12,000
Order value
$
120,000
$
80,000
$
100,000
What are the total delivery costs charged to Customer A during the year?
$5,738.
$6,650.
$6,938.
$20,235.
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