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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 $77,000 $68,000 $76,000 $65,000 Total Cost Driver 2,000 customer orders 21,450 line items 1,510 deliveries 79,300 cartons shipped She also gathered the following data for a typical operating period: Customer orders Line items Deliveries Cartons shipped General Supermarket 150 2,250 130 42,900 Drugstore Chains 350 4,200 280 21,000 Ma & Pa 1,500 15,000 1,100 15,400 REQUIRD [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 customer orders as the single driver, how much would be allocated to its Ma & Pa customers? Submit Answer Tries o/s Part B (5 tries; 5 points) Ir Pharmax uses an activity-based costing system to allocate its overhead costs, how much would be allocated to its Drugstore Chain customers? Submit Answer Tries o/s
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