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 7%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $107 to purchase these supplies. For years, Worley believed that the 7% 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 tivity Cost Pool (Activity Measure) Customer deliveries (Nunber 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 Total Activity s 560,000 7,000 deliveries 616,000 8,000 orders 345,000 15,000 orders 990,000 440,000 line items 650,000 $3,161,000 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 $39,000 to buy from manufacturers): Activity Activity Heasure Nunber of deliveries Nunber of manual orders Nunber of electzonic orders Nunber of line items picked University Memorial 15 21 14 140 230 Check my work Required 1. Compute the total revenue that Worley would receive from University and Memorial. 2. Compute the activity rate for each activity cost pool. 3. Compute the total activity costs that would be assigned to University and Memorial. 4. Compute Worley's customer margin for University and Memorial. (Hint Do not overlook the $39,000 cost of goods sold that Worley incurred serving each hospital.) Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Compute the total revenue that Worley would receive from University and Memorial University 41,730 Memorial 41,730 Required 2> Check r Required: 1.Compute the total revenue that Worley would receive from University and Memorial. 2. Compute the activity rate for each activity cost pool. 3. Compute the total activity costs that would be assigned to University and Memorial. 4. Compute Worley's customer margin for University and Memorial. (Hint Do not overlook the $39,000 cost of goods sold that Wosle incurred serving each hospital.) Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required4 Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Customer deliveries Manual order processing 77.00 per manual order Electronic order processing 23.00 per electronic order Line item picking $ 80.00 per delivery $ 2.25 per line item picked Required 1 Required 3> Required: 1. Compute the total revenue that Worley would receive from University and Memorial. 2. Compute the activity rate for each activity cost pool. 3. Compute the total activity costs that would be assigned to University and Memorial. 4. Compute Worley's customer margin for University and Memorial. (Hint Do not overlook the $39,000 cost of goods sold that Worley incurred serving each hospital) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required3Required 4 nces Compute the total activity costs that would be assigned to University and Memorial. ota Costs University Memoria
