Question 01: Med Max distributes medical supplies to doctors' offices and clinics throughout Alberta Med Max sets its prices by marking up its cost of goods sold by 7%. For example, if Med Max paid $100 to buy supplies from manufacturers, Med Max would charge its customers $107 to purchase these supplies. For years, Med Max believed that the 7% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Med Max decided to implement an ABC system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities, as shown below: Activity Cost Pool Customer deliveries Manual order processing.... .... Electronic order processing.................... Line tom picking........................ Other organisation sustaining costs.......... Total seling and administrative expense...... Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of ine tems picked NA Total Cost $ 400000 300000 200.000 500.000 800.000 52.000.000 Total Activity 5000 deliveries 4000 orders 2.500 orders 0.000 inetons Med Max gathered the data below for two of the many clinics that it serves-Ajax Clinic and Vaughn Clinic (both clinics purchased a total quantity of medical supplies that had cost Med Max $30,000 to buy from its manufacturers): Activity Measure Activity Ajax Clinic Vaughn Clinic 15 20 30 Number of deliveries Number of manual orders Number of electronic orders Number of line items picked 15 10 200 150 a. Compute the total revenue that Med Max would receive from City Clinic and County Clinic (2 Marks] b. Compute the activity rate for each activity cost pool. [4 Marks] c. Compute the total activity costs that would be assigned to City Clinic and County Clinic. [4 Marks] d. Compute Med Max's customer margin for City Clinic and County Clinic. [4 Marks]