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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 Activity Measure Total Cost Total Activity 4,000 deliveries 3,000 orders 11,500 orders 300,000 line items Number of deliveries 2$ Manual order processing Electronic order processing Line item picking 280,000 195,000 172,500 300,000 $ 947,500 Number of manual orders Number of electronic orders Number of line items picked 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 County Activity Measure Number of deliveries Number of manual orders General General 20 40 80 Number of electronic orders 15 Number of line items picked 150 310 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.

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 Activity Measure Total Cost Total Activity 4,000 deliveries 3,000 orders 11,500 orders 300,000 line items Number of deliveries 2$ Manual order processing Electronic order processing Line item picking 280,000 195,000 172,500 300,000 $ 947,500 Number of manual orders Number of electronic orders Number of line items picked 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 County Activity Measure Number of deliveries Number of manual orders General General 20 40 80 Number of electronic orders 15 Number of line items picked 150 310 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.

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 21E: Bounce Back Insurance Company carries three major lines of insurance: auto, workers compensation,...
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Required 1 Required 2 Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Customer delivenies Manual order processing Electronic order processing Line item picking per delivery per manual order per electronic order per line item picked ABC Cost Activity Cost Pool City General County General Customer deliveries Manual order processing Electronic order processing Line item picking Total activity costs $ 0 $ %24
Transcribed Image Text:Required 1 Required 2 Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Customer delivenies Manual order processing Electronic order processing Line item picking per delivery per manual order per electronic order per line item picked ABC Cost Activity Cost Pool City General County General Customer deliveries Manual order processing Electronic order processing Line item picking Total activity costs $ 0 $ %24
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 Measure Total Cost Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking Total Activity 4,000 3,000 orders 11,500 orders 300,000 line items Number of deliveries 280,000 195,000 172, 500 300,000 deliveries Number of manual orders Number of electronic orders Number of line items picked Total selling and administrative expenses $ 947,500 Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity City County Activity Measure General General Number of deliveries 20 40 Number of manual orders 80 Number of electronic orders 15 Number of line items picked 150 310 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.
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 Measure Total Cost Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking Total Activity 4,000 3,000 orders 11,500 orders 300,000 line items Number of deliveries 280,000 195,000 172, 500 300,000 deliveries Number of manual orders Number of electronic orders Number of line items picked Total selling and administrative expenses $ 947,500 Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity City County Activity Measure General General Number of deliveries 20 40 Number of manual orders 80 Number of electronic orders 15 Number of line items picked 150 310 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.
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