4-4 Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospitals. Inthe face of declining profits, Med Max decided to implement an activity-based costing system to improve its understanding of the costsincurred to serve each hospital. The company broke its selling and administrative expenses into four activities as shown below:Activity Cost PoolCustomer deliveriesManual order processingElectronic order processingLine item pickingActivity MeasureTotal CostTotal ActivityNumber of deliveriesNumber of manual ordersNumber of electronic ordersNumber of line items picked4,400 deliveries3,400 orders11,900 orders340, 000 line items325,600234, 600183, 260408,000Total selling and administrative expenses$ 1,151,460Med Max gathered the data below for two of the many hospitals that it serves-City General and County General:ActivityCityCountyGeneralActivity MeasureNumber of deliveriesGeneral1530Number of manual orders60umber of electronic orders15Number of line items picked110270Required:1. Compute the activity rate for each activity cost pool.2. Compute the total activity costs that would be assigned to City General and County General.Complete this question by entering your answers in the tabs below.Required 1Required 2Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)Activity RateActivity Cost PoolCustomer deliveriesper deliveryper manual orderManual order processingper electronic orderElectronic order processingper line item pickedLine item picking Activity Cost PoolCustomer deliveriesManual order processingElectronic order processingLine item pickingActivity MeasureTotal CostNumber of deliveriesNumber of manual ordersNumber of electronic ordersTotal Activity4,4003,400 orders11,900 orders24325,600234,600183, 260408,000deliveriesNumber of line items pickedTotal selling and administrative expenses340,000 line items$ 1,151,460Med Max gathered the data below for two of the many hospitals that it serves-City General and County General:CityGeneralActivityCountyGeneralActivity MeasureNumber of deliveriesNumber of manual ordersNumber of electronic ordersNumber of line items picked15306015110270Required:1. Compute the activity rate for each activity cost pool.2. Compute the total activity costs that would be assigned to City General and County General.Complete this question by entering your answers in the tabs below.Required 1Required 2Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediatecalculations.)ABC CostActivity Cost PoolCityGeneralCountyGeneralCustomer deliveriesManual order processingElectronic order processingLine item pickingTotal activity costsRenuired 1

Solution 1: Activity Estimated Overhead Cost Activity Base Usage of Activity Base Customer…

Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospitals. In the face of declining profits, Med Max decided to implement an activity-based costing system to improve its understanding of the costs incurred to serve each hospital. The company broke its selling and administrative expenses into four activities as shown below: Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking Activity Measure Total Cost Total Activity 4,400 deliveries 3,400 orders 11,900 orders line items Number of deliveries Number of manual orders $ 325,600 234,600 183,260 408,000 Number of electronic orders Number of line items picked 340,000 Total selling and administrative expenses $ 1,151,460 Med Max gathered the data below for two of the many hospitals that it serves–City General and County General: City General Activity County General Activity Measure Number of deliveries Number of manual orders 15 30 60 Number of electronic orders 15 Number of line items picked 110 270 Required: 1. Compute the activity rate for each activity cost pool. 2. Compute the total activity costs that would be assigned to City General and County General.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q