chapter 7 hw #4

req1

req2

req 3

req4

Check my work 4 Exercise 7-10 (Algo) Customer Profitability Analysis (L07-3, L07-4, L07-5) nts Skibbed 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 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 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: Book Hint Print References Activity Cost Pool (Activity Measure) customer deliveries (Number of deliveries) Man order processing Number of manual ordero) Electronie order processing Number of electronic orders) Line iten picking Number of line iteme picked) Other organization-sustaining coste (None) Total selling and adninistrative expenses Total cont Total Activity $415,000 5,000 deliveries 684,000 9.000 orders 221,000 13,000 orders 758,500 410,000 line itens 670.000 52,748.500 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 $37,000 to buy from manufacturers); Activity Measure Number of deliveries Number of manual orders Number of electronic orders Activity University Memorial 12 27 0 42 12 0 4 medical supplies that had cost Worley Activity University Memorial 12 27 0 47 12 0 120 280 Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked 10 points Skipped Book 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 $37,000 cos Worley incurred serving each hospital.) Hint Print References Complete this question by entering your answers in the tabs below. Required 2 Required 1 Required 3 Required 4 Compute the total revenue that Worley would receive from University and Memorial. Total Revenue University Memorial Hint Complete this question by entering your answers in the tabs below. Tint rences Required 1 Required 2 Required 3 Required 4 Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking per delivery per manual order per electronic order per line item picked Pupped 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 $37,000 cost of go Worley incurred serving each hospital.) eBook Hint Complete this question by entering your answers in the tabs below. Print erences Required 1 Required 2 Required Required 4 Required 3 Compute the total activity costs that would be assigned to University and Memorial Total Activity Costs University Memorial Check my w Number of manual orders Number of electronic orders Number of line items picked 0 12 120 0 280 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 $37,000 cost of goods sold 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 Worley's customer margin for University and Memorial. (Hint: Do not overlook the $37,000 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