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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
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.) B (Click the icon to view the activity level and cost information.) Required Requirement 3. Use the activity-based costing (ABC) information to allocate the $297,670 of other operating costs to each of the market segments. Compute the operating income (loss) for each market segment. (Round your answers to the nearest whole number.) General Supermarket Chains Activity Customer order processing Line-item processing Store delivery Cartons shipped Shelf stocking Total costs General "Mom and Drugstore Pop" Single Supermarket Chains Chains Stores Pharmacare Revenues $ 3,714,000 $ 3,155,000 $ 3,600,000 2,995,000 1,986,000 $ 8,855,000 1,814,000 8,409,000 Cost of goods sold Gross margin $ 114,000 $ 160,000 $ 172,000 446,000 297,670 Other operating costs $ $ 148,330 Operating income The level of each activity in the three market segments and the total cost incurred for each activity in 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 140 360 1,600 $ 79,800 Number of line items ordered 1,960 4,320 15,000 63,840 Number of store deliveries made 125 275 1,050 65,250 Number of cartons shipped to stores 37,000 26,000 14,000 77,000 11,780 Shelf stocking (hours) 320 180 120 $ 297,670 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 $297,670 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
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