A Company Estimates That Ordering Costs Are $4

question 123

Multiple Choice

A company estimates that ordering costs are $4.00 per order, picking costs are $3.00 per unique item ordered, packing costs are $0.04 per item, and return costs are $70.00 per return.A customer makes 50 orders, orders 80 unique items, and 900 total items.The customer makes 11 returns.The pricing structure is to charge customers for the cost of the services that are provided.Using activity-based pricing for each of the above items, what will be the total amount of additional cost paid by the customer?

• A)$1,246
• B)$77.04
• C)$1,540
• D)$476

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Definitions:

Lease Payments

Payments made under a lease agreement by the lessee to the lessor for the use of an asset over the lease term.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, often used in evaluating investment opportunities.

Interest Rate

The ratio of interest charged on a loan to the borrower, usually represented as a yearly percentage of the remaining loan amount.

Compound Interest

Calculating interest that includes both the original principal amount and all previously accumulated interest on a loan or deposit.