Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Addition Questions 2) Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Customer

image text in transcribed

Addition Questions

2) 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

3) Compute the total activity costs that would be assigned to University and Memorial.

Total Activity Costs
University
Memorial

4)

Compute Worleys customer margin for University and Memorial. (Hint: Do not overlook the $33,000 cost of goods sold that Worley incurred serving each hospital.) (Loss amounts should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places. Round your final answers to the nearest whole number.)

Customer Margin
University
Memorial

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 5%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies. For years, Worley believed that the 5% 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: Activity Cost Pool (Activity Measure) Customer deliveries (Number of deliveries) Manual order processing (Number of manual orders) Electronic order processing (Number of electronic orders) Line item picking (Number of line items picked) Other organization-sustaining costs (None) Total selling and administrative expenses Total Cost Total Activity $ 336, 2004 , eee deliveries 380,000 5,000 orders 375,000 15,000 orders 580,00 400,000 line items 650.000 $2,321, eee Worley gathered the data below for two of the many hospitals that it serves-University and Memorial (each hospital purchased medical supplies that had cost Worley $33,000 to buy from manufacturers): Activity University Memorial 20 Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked 15e 280 Required: 1. Compute the total revenue that Worley would receive from University and Memorial. 2. Compute the activity rate for each activity cost pool. 3. Compute the total activity costs that would be assigned to University and Memorial. 4. Compute Worley's customer margin for University and Memorial. (Hint. Do not overlook the $33,000 cost of goods sold that Worley Incurred serving each hospital.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the total revenue that Worley would receive from University and Memorial. Total Revenue University Memorial

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Between The Lines Of The Balance Sheet The Plain Mans Guide To Published Accounts

Authors: Michael Greener

2nd Edition

0080240712, 9780080240718

More Books

Students also viewed these Accounting questions

Question

=+What is the VIF for Age?

Answered: 1 week ago