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need help woth these questions er 7 Exercises 5 oped Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers
need help woth these questions
er 7 Exercises 5 oped Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies. For years, Worley believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown: Retivity Cont Pool (activity Measure) Total Cont Potal activity Customer deliveries (Number of deliveries) $ 516,000 6,000 deliveries Manual order processing Number of manual orders) 639,000 9,000 orders Electronic order processing Number of electronic orders) 206.000 13,000 orders Tone ite picking (amber of line items picked) 616,000 440,000 line items Other organization-staining costs (none) Total selling and administrative expenses $ 2,677,000 Worley gothered the data below for two of the many hospitals that it serves - University and Memorial (each hospital purchased medical supplies that had cost Worley $36,000 to buy from manufacturers): BOOK Art 620,000 Hences Activity Measure Number of deliveries Number of manual order Number of electronie orders Number of line itens picked Activity University Memorial 15 27 0 19 0 140 290 Required: 1. Compute the total revenue that Worley would receive from University and Memorial 2. Compute the activity rate for each activity cost pool. 3. Compute the total activity costs that would be assigned to University and Memorial 4. Compute Worley's customer margin for University and Memorial. (Hint Do not overlook the $36,000 cost of goods sold that Worley incurred serving each hospital.) Step by Step Solution
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