Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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 Meanure) Total cost Total Activity Customer deliveries (Number of deliveries) $ 410,000 5,000 deliveries Manual order processing Number of manual orders) 380,000 5,000 ordera Electronic order processing Number of electronic orders) 264,000 12,000 orders Line item picking (Number of line itens picked) 902,000 440,000 line items other organization-sustaining costs (none) 650,000 Total selling and administrative expenses $2,606,000 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 $36,000 to buy from manufacturers); Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Activity University Memorial 15 26 0 47 12 0 110 270 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 $36,000 cost of goods sold that Worley incurred serving each hospital) Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked University 15 0 12 110 Memorial 26 42 0 270 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 $36,000 cost of goods sold that Worley incurred serving each hospital) Complete this question by entering your answers in the tabs below. ances Required: Required 2 Required 3 Required 4 Compute the total revenue that Worley would receive from University and Memorial, Total Revenue University Memorial Red Required 2 > Retivity Measure Number of deliveries Number of manual order Number of electronie orders Number of line itens picked University 15 0 12 110 Memorial 26 42 0 270 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 $36,000 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 Required 4 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 Electronic order processing Line item picking por delivery per manual order per electronic order per line tom picked 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 $36,000 to buy from manufacturers): Activity Activity Measure University Memorial Number of deliveries 15 26 Number of manual orders 47 Number of electronic orders 12 Number of line itens picked 110 270 0 0 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 $36,000 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 activity costs that would be assigned to University and Memorial. Total Activity Costs University Memorial 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 $36,000 to buy from manufacturers): Activity Activity Measure University Memorial Number of deliveries 15 26 Number of manual orders 0 47 Number of electronic orders 12 0 Number of line itens picked 110 270 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 $36,000 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 Required 4 Compute Worley's customer margin for University and Memorial. (Hint: Do not overlook the $36,000 cost of goods sold that Worley incurred serving each hospital) (Loss amounts should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places. Round your final answers to the nearest whole number) Customer Margin University Memorial

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

Step: 3

blur-text-image

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

Accounting

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

23rd Edition

978-0324662962

More Books

Students also viewed these Accounting questions