Managerial accounting 4-9 1-3 med max

Activity-Based Costing 173 Computing ABC Product Costs LO4-2, LO4-3 Podacts Corporation makes two proxducts, titanium Rims and Posts Data reganding the two 4-B EXERCISE follow Direct Labor-Hours per Unit Rims Posts 0.40 0.20 20.000 units 80,000 units information about the company folloas ims neqaire $17 in direct materials per unit, and Posts require $10. b. The direct labor wage rate is $16 per hour e. Rims are d. The ABC system has the following activity coss pools: more complex to manufacture than Posts and they require special equipment. Activity Cost Pool Activity Measure Number of setups Direct labor-hours Overhead Cost $21,600 $180,000 $288,000 100 4,000 8,000 80 Special processing General factory 4.000 24.000 16.000 1. Compute the activity rate for each activity cost pool. 2. Determine the unit product cost of each product according to the ABC system. 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 Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Customer deliveries s 400.000 300.000 200.000 500,000 $1,400,000 5.000 delivenes 4,000 orders 12.500 orders 400,000 line items Line item picking Total selling and administrative expenses Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: City General County General 20 40 Activity Measure 10 Number of deliveries 10 100 260 Number of line items picked . 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 3. customers Describe the purchasing behaviors that are likely to increase Med Max's cost to serve its