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Pharmax Distributors specializes in the distribution of pharmaceutical products at the retail level. Pharmax's customer base is comprised of three main retail groups: general supermarket
Pharmax Distributors specializes in the distribution of pharmaceutical products at the retail level. Pharmax's customer base is comprised of three main retail groups: general supermarket chains, large drugstore chains, and small, single-store "Ma & Pa" pharmacies. To evaluate the relative profitability of each customer group, Pharmax plans to use an allocation system that recognizes the relative demands that these groups place on the company's resources. Parmax's chief accountant examined the firm's support costs and activities and collected the following data for a typical operating period: Support Activity Order processing Line item processing Store deliveries Carton handling Budgeted Cost $72,000 $66,000 $71,000 $71,000 Total Cost Driver 2,230 customer orders 23.000 line items 1,580 deliveries 74,850 cartons shipped She also gathered the following data for a typical operating period: General Supermarket 140 2,100 110 29,700 Drugstore Ma & Pa Customer orders Line items Deliveries Cartons shipped Chains 390 3,900 320 25,600 1,700 17,000 1,150 19,550 REQUIRED [ROUND ALL ALLOCATION RATES TO THE NEAREST CENT AND ALLOCATIONS TO THE NEAREST DOLLAR.] Part A (5 tries; 5 points) If Pharmax uses a single-driver system to allocate its support costs, with number of deliveries as the single driver, how much would be allocated to its Drugstore Chain customers? Submit Answer Tries 0/5 Part B (5 tries; 5 points) If Pharmax uses an activity-based costing system to allocate its overhead costs, how much would be allocated to its General Supermarket customers? Submit AnswerTries 0/5
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