Question
Check my workCheck My Work button is now enabled1 Item 2 Med Max buys surgical supplies from a variety of manufacturers and then resells and
Check my workCheck My Work button is now enabled1
Item 2
Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospitals. In the face of declining profits, Med Max decided to implement an activity-based costing system to improve its understanding of the costs incurred to serve each hospital. The company broke its selling and administrative expenses into four activities as shown below:
Activity Cost Pool | Activity Measure | Total Cost | Total Activity | ||
Customer deliveries | Number of deliveries | $ | 453,600 | 5,400 | deliveries |
Manual order processing | Number of manual orders | 347,600 | 4,400 | orders | |
Electronic order processing | Number of electronic orders | 211,560 | 12,900 | orders | |
Line item picking | Number of line items picked | 638,000 | 440,000 | line items | |
Total selling and administrative expenses | $ | 1,650,760 | |||
Med Max gathered the data below for two of the many hospitals that it servesCity General and County General:
Activity | ||
Activity Measure | City General | County General |
Number of deliveries | 15 | 30 |
Number of manual orders | 0 | 60 |
Number of electronic orders | 15 | 0 |
Number of line items picked | 140 | 300 |
Required:
1. Compute the activity rate for each activity cost pool.
2. Compute the total activity costs that would be assigned to City General and County General.
Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)
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Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.)
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