Express Travel decides to price delivery service according to the results of a recent activity-based...
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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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