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 10%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $110 to purchase these supplies. For years, Worley believed that the 10% 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 Cost Total Activity Customer deliveries (Number of deliveries) $ 410,68 5,eee deliveries Manual order processing Number of manual orders) 592,000 8,000 orders Electronic order processing (Number of electronic orders) 208,eee Line item picking (Number of line itens picked) 735.66 420, see line itens Other organization-sustaining costs (None) 650.000 Total selling and administrative expenses $2,595,880 13.000 orders ce: 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 University Memorial Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of lineatens picked 20 190 3 230 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 Memortal. Hint Do not overlook the $30,000 cost of goods sold that Worley Incurred serving each hospital Required 1 Required 2 Required Required Compute the total revenue that Worley would receive from University and Memorial Total Revenue University Memorial Required 2 > Required 1 Requirdoz Required 3 Required 1 Compute the activity ral Required 2 y 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 per delivery per manual order per electronic order per line item picked Required Required Tuired) Requited Compute the total activity costs th Required 3 red to University and Memorial. Total Activity Costs University Memona Required Required 2 Required 3 Required Compute Worley's customer margin for University and Memorial (Hint: Do not overlook the $30,000 cost of goods sold that Worley incurred serving each hospital.) (Losemounts should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places. Round your nat answers to the nearest whole number Customer Margin University Memoria

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

Between The Lines Of The Balance Sheet The Plain Mans Guide To Published Accounts

Authors: Michael Greener

2nd Edition

0080240712, 9780080240718

More Books

Students also viewed these Accounting questions

Question

What are the methods and approaches to managerial accounting?

Answered: 1 week ago