Check 16 Exercise 7-10 (Algo) Customer Profitability Analysis (L07-3, L07-4, LO7-5) 50 points eBook 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 6%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $106 to purchase these supplies. For years, Worley believed that the 6% 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) Total Cost Total Activity Customer deliveries (Number of deliveries) $ 246,000 3,000 deliveries Manual order processing (Number of manual orders) 370,000 5,000 orders Electronic order processing Number of electronic orders) 247,000 13,000 orders Line Itom picking (Number of line itens picked) 609,000 420.000 line itens Other organization-sustaining coats (None) 670,000 Total selling and administrative expenses $2,242,000 Hint References 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 $32,000 to buy from manufacturers) Activity Activity Measure University Memorial Number of deliveries 18 22 Number of manual orders 49 Number of electronic orders 16 Number of line items picked 160 250 0 0 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 $32,000 cost of goods sold that Worley incurred serving each hospital.) eBook HM Complete this question by entering your answers in the tabs below. Print Required 1 Required 2 Required 3 Required 4 Compute the total revenue that Worley would receive from University and Memorial References Total Revenue University Memorial Required 2 > 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 $32,000 cost of goods sold that Worley incurred serving each hospital.) Book Hint Complete this question by entering your answers in the tabs below. Print Required 1 Required 2 Required 3 Required 4 etences 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 linelom picked Required 1 Required 3 > Complete this question by entering your answers in the tabs below. Print Required 1 Required 2 Required 3 Required 4 Herences Compute the total activity costs that would be assigned to University and Memorial. Total Activity Costs University Memorial 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 $32,000 cost of goods sold that Worley incurred serving each hospital.) int Complete this question by entering your answers in the tabs below. int Required 1 Required 2 Required 3 Required 4 erences Compute Worley's customer margin for University and Memorial (Hint: Do not overlook the $32,000 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 (Required 3
