Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Worley Company buys surgical supplies from a varlety of manufacturers and then resells and dellivers these supplies to hundreds of hospitals. Worley sets its prices

image text in transcribed

Worley Company buys surgical supplies from a varlety of manufacturers and then resells and dellivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up Its cost of goods sold to those hosplitals by 9%. For example, If a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $109 to purchase these supplies. For years, Worley belleved that the 9 % 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) Customer deliveries (Number of deliveries) Total Cost Total Activity 5,eee deliveries 410,eee 420, eee 294,eee 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) 6,eee orders 14,eee orders see,eee line items 900,eee 650,eee $2,674,000 Total selling and administrative expenses Worley gathered the data below for two of the many hospitals that it serves-University and Memorlal (each hospital purchased medical supplles that had cost Worley $37,000 to buy from manufacturers): Activity Memorial Activity Measure Number of deliveries University 19 28 Number of manual orders 41 Number of electronic orders 20 Number of 1ine items picked 18e 220 Required: 1. Compute the total revenue that Worley would recelve from Unlversity and Memorlal. 2. Compute the activity rate for each activity cost pool. 3. Compute the total activity costs that would be assigned to University and Memorlal. 4. Compute Worley's customer margin for University and Memorlal. (Hint Do not overlook the $37,000 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 Total Revenue University Memorial Required 1 Required 2

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

Survey of Accounting

Authors: Carl S. Warren

7th edition

1285974360, 1285183487, 9781285974361, 978-1285183480

More Books

Students also viewed these Accounting questions

Question

7. What is a 2B+D?

Answered: 1 week ago

Question

What does the start( ) method defined by Thread do?

Answered: 1 week ago

Question

love of humour, often as a device to lighten the occasion;

Answered: 1 week ago

Question

orderliness, patience and seeing a task through;

Answered: 1 week ago

Question

well defined status and roles (class distinctions);

Answered: 1 week ago