! 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 hospital by 6% For example if a hospital buys supplies from Worley that had cost Worley $100 to buy from manufacturers, Worley would charge the hospital $106 to purchase these supplies For years, Worley believed that the 6% 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 below Activity Cost Pool (Activity Measure) Total Activity Total Cost S 340,000 4,000 deliveries Customer deliveries (Number of deliveries) Manual order processing (Number of manual orders) Electronic order processing (Number of electronic orders) Line item picking (Number of line items picked) Other organization-sustaining costs (None) 365,000 5,000 orders 264,000 11,000 orders 906,500 490,000 line items 620,000 Total selling and administrative expenses $2,495,500 Worley gathered the data below for two of the many hospitals that it serves-University and Memorial (both hospitals purchased a total q bon hopiais pur chased a tolal quanhity of medical sppis that had cost Worley $34,000 to buy from ts Activity Activity Measure Number of deiveries Number of manual orders Number of electronic orders Number of line items picked 19 46 190 220