Medcare Inc. specializes in the distribution of pharmaceutical products. Medcare operates at capacity and has three main market segments. (Click the icon to view the segments.) Rick Flair, the new controller of Medcare, reported the following data for August 2018 (Click the icon to view the data.) (Click the icon to view the activities and relevant information.) (Click the icon to view the activity level and cost information) Required Requirement 1. Compute the August 2018 gross margin percentage for each of Medcare's three market segments. (Enter the percent to two decimal places.) ( Gross margin Revenues ) 100 Gross margin percentage Supermarket Chains ) 100 % - X 1 Segments a. General supermarket chains b. Drugstore chains c. "Mom and Pop' single-store pharmacies Print Done X 1 i Data Table General "Mom and Pop" Single Supermarket Chains Drugstore Chains Stores Pharmacare Revenues $ 3,700,000 $ 3,612,000 3,145,000 $ 2,985,000 1,988,000 $ 1,796,000 8,833,000 8,393.000 Cost of goods sold Gross margin $ 88,000 $ 160,000 $ 192,000 440,000 333,580 Other operating costs $ 106,420 Operating income Print Done i Activities -X e For many years, Medcare has used gross margin percentage [(Revenue - Cost of goods sold) +Revenue) to evaluate the relative profitability of its different groupings of customers (distribution outlets). Flair recently attended a seminar on activity-based costing (ABC) and decides to consider using it at Medcare. Flair meets with all the key managers and many staff members. People generally agree that there are five key activity areas 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 Print Done - Activity level and cost information The level of each activity in the three market segments and the total cost incurred for each activity 2018 are shown below. General "Mom and Total Cost Supermarket Drugstore Pop" Single of Activity Activity Chains Chains Stores in 2018 Number of orders processed 200 500 1,800 $ 87,500 Number of line items ordered 1,950 4,300 14,750 84,000 Number of store deliveries made 110 250 1,015 75,625 Number of cartons shipped to stores 36,000 25,000 15,000 76,000 10.455 310 Shelf stocking (hours) 210 95 333,580 Print Done * Required 1. Compute the August 2018 gross margin percentage for each of Medcare's three market segments. 2. Compute the August 2018 per-unit cost driver rate for each of the five activity areas. 3. Use the activity-based costing (ABC) information to allocate the $333,580 of "other operating costs" to each of the market segments. Compute the operating income (loss) for each market segment. 4. Comment on the results. What new insights are available with the activity-based information? Print Done