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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 Activity Measure Number of deliveries Number of manual orders Number of electronic orders. Number of line items picked Electronic order processing Line item picking Total selling and administrative expenses Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity Required 1 City General Required 2 10 0 10 100 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. Activity Cost Pool County General Complete this question by entering your answers in the tabs below. Activity Measure Number of deliveries. Number of manual orders Number of electronic orders Number of line items picked 20 40 0 260 City General ABC Cost Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.) 4 County General ABC Total Cost $ 400,000 300,000 200,000 500,000 $ 1,400,000 # Next > Total Activity 5,000 deliveries 4,000 orders 12,500 orders 400,000 line items

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 Activity Measure Number of deliveries Number of manual orders Number of electronic orders. Number of line items picked Electronic order processing Line item picking Total selling and administrative expenses Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity Required 1 City General Required 2 10 0 10 100 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. Activity Cost Pool County General Complete this question by entering your answers in the tabs below. Activity Measure Number of deliveries. Number of manual orders Number of electronic orders Number of line items picked 20 40 0 260 City General ABC Cost Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.) 4 County General ABC Total Cost $ 400,000 300,000 200,000 500,000 $ 1,400,000 # Next > Total Activity 5,000 deliveries 4,000 orders 12,500 orders 400,000 line items

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 4BE: Activity-based costing: selling and administrative expenses Jungle Junior Company manufactures and...
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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 Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Electronic order processing Line item picking Total selling and administrative expenses Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity City General 10 0 10 100 Required 1 Required 2 County General Activity Cost Pool 20 40 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. Activity Measure Number of deliveries. Number of manual orders Number of electronic orders. Number of line items picked 0 260 Complete this question by entering your answers in the tabs below. City General ABC Cost Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.) County General ABC < Prev Total Cost Total Activity 5,000 deliveries 4,000 orders $ 400,000 300,000 200,000 500,000 400,000 line items. 12,500 orders $ 1,400,000 4 of 5 HH Next >
Transcribed Image Text: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 Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Electronic order processing Line item picking Total selling and administrative expenses Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity City General 10 0 10 100 Required 1 Required 2 County General Activity Cost Pool 20 40 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. Activity Measure Number of deliveries. Number of manual orders Number of electronic orders. Number of line items picked 0 260 Complete this question by entering your answers in the tabs below. City General ABC Cost Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.) County General ABC < Prev Total Cost Total Activity 5,000 deliveries 4,000 orders $ 400,000 300,000 200,000 500,000 400,000 line items. 12,500 orders $ 1,400,000 4 of 5 HH Next >
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. Required 1 Required 2 Complete this question by entering your answers in the tabs below. 100 Activity Cost Pool Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.) Customer deliveries Manual order processing Electronic order processing Line item picking Total activity costs City General ABC Cost $ < 260 0 County General ABC Cost $ Required 1 0 Required 2 of 5 H Next >
Transcribed Image Text: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. Required 1 Required 2 Complete this question by entering your answers in the tabs below. 100 Activity Cost Pool Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.) Customer deliveries Manual order processing Electronic order processing Line item picking Total activity costs City General ABC Cost $ < 260 0 County General ABC Cost $ Required 1 0 Required 2 of 5 H Next >
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