Problem:
A company using activity based pricing marks up the direct cost of goods by 40% plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $6.00 per order placed; $3.00 per separate item ordered; $28.00 per return. A customer places 10 orders with a total direct cost of $2,000, orders 300 separate items, and makes 5 returns.
Required:
Question: What will the customer be charged?
A) $3,000
B) $3,900
C) $5,330
D) $5,750
Note: Show supporting computations in good form.