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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
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 374,400 800 deliveries Customer deliveries Number of deliveries Manual order processing Number of manual orders 277,400 3,800 orders Electronic order processing Number of electronic orders 194,340 12,300 orders Line item picking Number of line items picked 513,000 380,000 line items 1,359,140 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: Activity County Activity Measure City General General Number of deliveries 10 20 Number of manual orders 40 Number of electronic orders 10 Number of line items picked 120 280 Required 1. 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 per line item picked Line item picking
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