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 supplles from Worley that cost Worley $100 to buyfrom manufacturers, Worley would charge the hospital $105 to purchase these supplles For years, Worley believed that the 5% mark up 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 improveits understanding of cust omer profitabilty. The company broke its seling and administrative expenses into five activities as shown: Activity Cost Pool (Activity Measure) 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) Total selling and administrative expenses Total Cost $435,000 370,000 345,000 877,500 600, 000 $ 2,627,500 Total Activity 5,000 deliveries 5,00 orders 15,200 orders 450, 000 line items Worley gathered the data below for two of the many hospit als that it serves-University and Memorial (each hospit al purchased medical supplies that had cost Worley $31,000 to buyfrom manufacturers) Activity Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked University 17 0 19 110 Memorial 27 47 0 290