Compute the total activity costs that would be assigned to

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Reference no: EM13588964

Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 8% For example, if a hospital buys supplies from Worley that had cost Worley $100 to buy from manufactures, Worley would charge the hospital $108 to purchase these supplies.

For years, Worley believed that the 8% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown below:

Activity Cost Pool	Activity Measure	Total Cost		Total Activity
Customer deliveries	Number of deliveries	$	696,000	8,000	deliveries
Manual order processing	Number of manual orders		420,000	6,000	orders
Electronic order processing	Number of electronic orders		224,000	14,000	orders
Line item picking	Number of line items picked		1,175,000	470,000	line items

Other organizational costs (None) 610,000 Total selling and administrative expenses		$	3,125,000

Worley gathered the data below for two of the many hospitals that it serves-University and Memorial (both hospitals purchased a total quantity of medical supplies that cost Worley $35,000 to buy from its manufactures:

	Activity

Activity Measure	University	Memorial
Number of deliveries	19	21
Number of manual orders	0	47
Number of electronic orders	11	0
Number of line items picked	170	260

Required: Compute the total revenue that Worely would recieve from University and Memorial

Univerity $

Memorial $

1.	Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)

Activity Cost Pool	Activity Rate
Customer deliveries	$	per delivery
Manual order processing	$	per manual order
Electronic order processing	$	per electronic order
Line item picking	$	per line item picked

2.	Compute the total activity costs that would be assigned to Univeristy and Memorial. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations.)

Univeristy:

Activity Cost Pool	ABC Cost
Customer deliveries	$
Manual order processing
Electronic order processing
Line item picking

Total activity costs	$

Memorial

Activity Cost Pool	ABC Cost
Customer deliveries	$
Manual order processing
Electronic order processing
Line item picking

Total activity costs	$

Reference no: EM13588964

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