P P -R Nanon. Pak T TECk iden werth n Mane he" to ason- Ontwtaln ,a da Rado. leh w waped. mi.de prati. - Help Save& Exit Submit 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 ho pitals by 6% For example if a hospital buys supplies from Worley that cost Worley $100 to buy trom manufacturers, Worley would charge the hospital So6 to purchase these supplies. For years, Worley believed t at the 6% mark up covered its selling and admnetrative expenses ard provided a reasonable proft However, in the face of dedlining profits, Worley decided to implement an activity based costing system to help improwe its into five activities as understanding of customer profitability. The company broke its selling and administrative expenses Activity Cost Pool (Activity Measure) Custoser deliverles (Number of deliveries) Manual order processing (Number of manual orders) Electronic arder processing (Number of electronic orders) Line Ites picking (Number of 1ine itess picked) Other organlzat ion-sustaining costs (None) Total selling and adninistrative expenses 5 144,004,e00 deliveries 0ee onders 588,000 428,e0 1ine items 2,118,eee Worley gathered the data below for two of the many hospitals that i serves-University and Memorial (each hospital purchased medical supplies that had cost Worley $36,000 to buy from manufacturers) Activity Heasure Number of deliverles 14 27