Exercise 5-10 (Algo) Customer Profitability Analysis (LO5-3, LO5-4, LO5-5) 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 5%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies For years, Worley believed that the 5% 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 cont Pool (Activity Measure) Total Coat Total activity Customer deliveries (Number of deliveries) $ 480,000 6.000 deliveries Manual order processing Number of manual orders) 304,000 4,000 orders Electronic order processing Number of electronic orders) 200,000 10,000 orders Line item picking (Number of line items picked) 836,000 440,000 line items Other organization-sustaining costs (none) 690.000 Total selling and administrative expenses $2,510,000 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 $33,000 to buy from manufacturers) Activity Activity Measure University Memorial Number of deliveries 15 30 Number of manual orders 0 47 Number of electronic orders 11 Number of line items picked 290 0 190 Required: Compute the total revenue that Worley would receive from University and Memorial. 2. Compute the activity rate for each activity cost pool. 2. Compute the total activity costs that would be assigned to University and Memorial Compute Worley's customer margin for University and Memorial. (Hint Do not overlook the $33,000 cost of goods sold that Worley curred serving each hospital.) Activity Measure Number of deliveries Number of manual orders Number of electronie orders Number of line items picked Activity University Memorial 15 30 0 47 11 0 190 290 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 $33,000 cost of goods sold that Worley Incurred serving each hospital.) Complete this question by entering your answers in the tabs below. Required: Required 2 Required 3 Required 4 Compute the total revenue that Worley would receive from University and Memorial Total Revenue University Memorial Required 2 > Activity Mensure Number of deliveries Number of manual orders Number of electronic orders Number of Ilne teme picked Metivity University Memorial 15 30 D 47 11 0 190 290 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 $33,000 cost of goods sold that Worley incurred serving each hospital) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required Required 4 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 lino tom picked 3 Activity Measure Number of deliveries Number of manual orders Number of electronie orders Number of line itens picked Activity University Memorial 15 0 47 11 0 290 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 $33,000 cost of goods sold that 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 $33,000 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