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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
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 Customer deliveries Manual order processing Electronic order processing Line item picking Total selling and administrative expenses Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Total Cost $ 387,100 288,600 197,160 507,000 $ 1,379,860 Total Activity 4,900 deliveries 3,900 orders 12,400 orders 390,000 line items Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity Number of deliveries Activity Measure Number of manual orders City General County General 20 40 0 80 Number of electronic orders 20 Number of line items picked 110 0 270 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. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Customer deliveries Activity Rate per delivery Manual order processing per manual order Electronic order processing per electronic order Line item picking per line item picked Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.) Activity Cost Pool City General ABC Cost County General ABC Cost Customer deliveries Manual order processing Electronic order processing Line item picking Total activity costs
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