Exercise 4-9 Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO4-2, LO4-3] 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.

Required 1 Required 2 Compute the activity rate for each activity cost pool. (Round yo Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking Activity Rate per delivery per manual order per electronic order per line item picked Required 1 Required 1 Required 2 Compute the total activity costs that would be assigned to City calculations.) ABC Cost Activity Cost Pool City General County General Customer deliveries Manual order processing Electronic order processing Line item picking Total activity costs