Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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: Budgeted Cost Total Cost Driver Support Activity Order processing 588,000 563,000 1,820 customer orders 21,100 line items Line item processing Store deliveries 1,630 deliveries $71,000 566,000 Carton handling 78,650 cartons shipped She also gathered the following data for a typical operating period: General Supermarket Drugstore Chains Ma & Pa Customer orders 140 1,300 Line items 14,300 380 4,560 330 28,050 2,240 100 29,000 Deliveries 1,200 Cartons shipped 21,600 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 customer orders 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 Answer Tries 0/5

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Tools for business decision making

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

6th Edition

978-0470477144, 1118096894, 9781118214657, 470477148, 111821465X, 978-1118096895

More Books

Students also viewed these Accounting questions