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newconnect ercises He Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley

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newconnect ercises He 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 8% For example, if a hospa buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $108 to purchase these supplies For years, Worley believed that the 8% markup covered its selling and administrative expenses and provided a reasonable prom However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitablity. The company broke its selling and administrative expenses into five activities as shown: Total Coat Total Activity Castoner deliveries (Sumber of deliver ies) Nanual order processing (Nusber of manual ordere) Electronie order processing (Number of eleetronic orders) 356,000 4,000 deliveries 518,000 7,000 orders item pieking (Number of line items pieked 08,000 14,000 orders 735,000 420.000 line items ization-s sustaining coats (None) Total selling and administrative expeses 2,557,000 Worley gathered the data below for two medical supplies that had cost Worley $33,000 to buy from manufacturers): of the many hospitals that it serves-University and Memorial (each hospital purchased vity Meaaure Sumber of manosl orders unber of Nunber of line items pieked 130 230 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 incurred serving each hospital.) customer margin for University and Memorial. (Hint Do not overlook the $33,000 cost of goods sold that Worley K Prev 4of5 Next> 0

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