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Any available to help with the below problem? - Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these
Any available to help with the below problem? -
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. ifa hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, 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 ofdeclining profits, Worley decided to implement an activitybased 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) Total Cost Total Activity Customer deliveries (Number of deliveries) $ 581,999 7,999 deliveries Manual order processing (Number of manual orders) 296,699 4,999 orders Electronic order processing {Number of electronic orders} 192,699 12,999 orders Line item picking (Number of line items picked) 1,194,599 479,999 line items Other organization-sustaining costs {None) 699,999 Total selling and administrative expenses $ 218535599 Worley gathered the data below for two ofthe many hospitals that it servesUniversity and Memorial (each hospital purchased medical supplies that had cost Worley $39,000 to buy from manufacturers}: Activity Activity Measure University Memorial Number of deliveries 14 2? Number of manual orders 9 49 Number of electronic orders 14 9 Number of line items picked 149 259 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 $39,000 cost ofgoods sold that Worley incurred serving each hospital}Step by Step Solution
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