work Saved Help Save & Exit Check my 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 hospitals by 5%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies. For years, Worley believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown: Activity Cost Pool (Activity Measure) Total Activity Customer deliveries (Number of deliver'Yes) 5,000 deliveries Manual order processing Number of manual orders) 248,000 Electronic order processing Number of electronic orders) 450,000 line items Line Icom picking (Number of line items picked) other organization-sustaining costs (None) 602, ce Total selling and administrative expenses Total Cost $ 500,000 4,000 orders 12,500 orders 200.000 450,000 $2,000,000 Worley gathered the data below for two of the many hospitals that it serves-University and Memorial (each hospital purchased medical supplies that had cost Worley $30,000 to buy from manufacturers): Activity Measure Number of deliveries Number of manual orders Number of electronic orders Activity University Memorial 10 25 e 30 15 2 of 6 work Saved Help Save & Exit Check my 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 hospitals by 5%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies. For years, Worley believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown: Activity Cost Pool (Activity Measure) Total Activity Customer deliveries (Number of deliver'Yes) 5,000 deliveries Manual order processing Number of manual orders) 248,000 Electronic order processing Number of electronic orders) 450,000 line items Line Icom picking (Number of line items picked) other organization-sustaining costs (None) 602, ce Total selling and administrative expenses Total Cost $ 500,000 4,000 orders 12,500 orders 200.000 450,000 $2,000,000 Worley gathered the data below for two of the many hospitals that it serves-University and Memorial (each hospital purchased medical supplies that had cost Worley $30,000 to buy from manufacturers): Activity Measure Number of deliveries Number of manual orders Number of electronic orders Activity University Memorial 10 25 e 30 15 2 of 6