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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 Activity Measure Number of deliveries Number of manual orders Electronic order processing Number of electronic orders Line item picking Number of line items picked Total selling and administrative expenses Total Cost $ 400,000 300,000 200,000 Total Activity 5,000 deliveries 4,000 orders 12,500 orders 500,000 400,000 $1,400,000 Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: line items Activity Number of deliveries Activity Measure Number of manual orders: City General County General 10 201 0 40 Number of electronic orders 10 0 Number of line items picked 100 260 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking Activity Rate: per delivery per manual order per electronic order per line item picked
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