A company using activity-based pricing marks up the direct cost of goods by 30% and then adds the cost of the services that are provided.Indirect costs are charged as follows: $8.00 per order placed; $4.00 per separate item ordered; $30.00 per return.A customer places 10 orders with a total direct cost of $3,000, orders 300 separate items, and makes 5 returns.What will the customer be charged?
A)$3,000
B)$3,900
C)$5,330
D)$5,759

Question

Quizplus · Accepted Answer

To calculate the total cost for the customer, we need to add the markup for direct cost, the costs for placing orders and separate items ordered, and the costs for returns.

Markup on direct cost: 30% of $3,000 = $900

Cost for placing 10 orders: $8.00 x 10 = $80.00

Cost for ordering 300 separate items: $4.00 x 300 = $1,200.00

Cost for 5 returns: $30.00 x 5 = $150.00

Total cost = $900 + $80 + $1,200 + $150 = $2,330.00

Adding the direct cost of $3,000, the customer will be charged:

Total charge = $2,330.00 + $3,000.00 = $5,330.00

Therefore, the correct answer is C.

A Company Using Activity-Based Pricing Marks Up the Direct Cost