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For years, Worley believed the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits,
For years, Worley believed 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 improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown: Worley gathered the data below for two of the many hospitals it serves_University and Memorial (each hospital purchased medical supplies that cost Worley $30,000 to buy from manufacturers): Required: 1. Compute the total revenue Worley would receive from University and Memorial. 2. Compute the activity rate for each activity cost pool. 3. Compute the total activity costs assigned to University and Memorial. 4. Compute Worley's customer margin for University and Memorial. (Hint: Do not overlook the $30,000 cost of goods sold that Worley incurred serving each hospital.) Complete this question by entering your answers in the tabs below. Compute the total revenue Worley would receive from University and Memorial
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