Medcare, Inc., a distributor of special pharmaceutical products, operates at capacity and has three main market segments. Rick Flair, the new controller of Medcare, reported the following data for 2020 (Click the icon to view the data.) For many years, Medcare has used gross margin percentage to evaluate the relative profitability of its market segments. VOIT Dave But Flair recently attended a seminar on activity-based costing and is considering using it at Medcare to analyze and allocate other operating costs. (Click the icon to view the activities and relevant information) The level of each activity in the three market segments and the total cost incurred for each activity in 2020 is as follows: (Click the icon to view the activity level and cost information.) Read the requirements. Data Table grmatic x hd the matior Medcare 2020 Medcare a Revenues General Supermarket Drugstore Mom-and-Pop Chains Chains Single Stores 3.714,000 $3,140,000 $ 1.984,000 $ 3,600,000 3,005,000 1,805,000 $ 114,000 $ 135,000 $ 179,000 00 8,838,000 8,410,000 Cost of goods sold Gross margin Other operating costs Operating income 428,000 292,150 135,850 Print Done ***** 00 Duri Tecently attended a seminar on activity-based costing Data Table at X patior Id the nation cho S m 1400 He meets with all the key managers and several of his operations and sales staff, and they agree that there are five key activities that drive other operating costs at Medcare. Activity Area Cost Driver Order processing Number of customer purchase orders Line-Item processing Number of line items ordered by customers Delivering to stores Number of store deliveries Cartons shipped to store Number of cartons shipped Stocking of customer store shelves Hours of shelf-stocking Each customer order consists of one or more line items. A line item represents a single product (such as Extra-Strength Tylenol Tablets) Each product line item is delivered in one or more separate cartons. Each store delivery entails the delivery of one or more cartons of products to a customer. Medcare's staff stacks cartons directly onto display shelves in customers' stores. Currently, there is no additional charge to the customer for shelf-stocking and not all customers use Medcare for this activity Data Table Activity-based Cost Data Medcare 2020 Activity Level General Mom-and- Total Cost of Activity Pop Single Supermarket Chains 100 Stores in 2020 Drugstore Chains 300 4.700 325 23,000 Activity Orders processed (number) Line-items ordered (number) Store deliveries made (number) Cartons shipped to stores (number) Shelf stocking (hours) Total 1,800 $ 15,850 2,200 125 37,000 960 92,400 45,500 70.500 74,000 9.750 292,150 14,000 375 185 90 $ Print Done nofitabilitate market camonte . (Click the icon to view the activities and relevar The lowel of each activity in the three market came Requirements ost 1. Compute the 2020 gross-margin percentage for each of Medcare's three market segments. 2. Compute the cost driver rates for each of the five activity areas. 3. Use the activity-based costing information to allocate the $292,150 of "other operating costs" to each of the market segments. Compute the operating income for each market segment. 4. Comment on the results. What new insights are available with the activity-based costing information? Print Done