Homework Help is Here – Start Your Trial Now!
Business
Accounting
Tara Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Tara sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Tara that had cost Tara $100 to buy from manufacturers, Tara would charge the hospital $105 to purchase these supplies. For years, Tara believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits Tara 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 below: Activity Cost Pool (Activity Measure) Customer deliveries (Number of deliveries) 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) Total selling and administrative expenses Total Cost Total Activity $500,000 5,000 deliveries $248,000 4,000 orders $200,000 12,500 orders $450,000 450,000 line items 602,000 $2,000,000 Tara gathered the data below for two of the many hospitals that it serves - University and Memorial (both hospitals purchased a total quantity of medical supplies that cost Tara $30,000 to buy from its manufacturers): Activity Measure Number of deliveries Activity University Memorial 10 Number of manual orders 0 Number of electronic orders 15 Number of line items picked 120 25 30 0 250 Compute the total revenue that Tara would receive from University and Memorial.

Tara Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Tara sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Tara that had cost Tara $100 to buy from manufacturers, Tara would charge the hospital $105 to purchase these supplies. For years, Tara believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits Tara 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 below: Activity Cost Pool (Activity Measure) Customer deliveries (Number of deliveries) 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) Total selling and administrative expenses Total Cost Total Activity $500,000 5,000 deliveries $248,000 4,000 orders $200,000 12,500 orders $450,000 450,000 line items 602,000 $2,000,000 Tara gathered the data below for two of the many hospitals that it serves - University and Memorial (both hospitals purchased a total quantity of medical supplies that cost Tara $30,000 to buy from its manufacturers): Activity Measure Number of deliveries Activity University Memorial 10 Number of manual orders 0 Number of electronic orders 15 Number of line items picked 120 25 30 0 250 Compute the total revenue that Tara would receive from University and Memorial.

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 18E
See similar textbooks
icon
Related questions
Question
100%

Compute the total revenue that Tara would received from university & memorial.

Tara Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Tara sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Tara that had cost Tara $100 to buy from manufacturers, Tara would charge the hospital $105 to purchase these supplies. For years, Tara believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits Tara 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 below: Activity Cost Pool (Activity Measure) Customer deliveries (Number of deliveries) 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) Total selling and administrative expenses Total Cost Total Activity $500,000 5,000 deliveries $248,000 4,000 orders $200,000 12,500 orders $450,000 450,000 line items 602,000 $2,000,000 Tara gathered the data below for two of the many hospitals that it serves - University and Memorial (both hospitals purchased a total quantity of medical supplies that cost Tara $30,000 to buy from its manufacturers): Activity Measure Number of deliveries Activity University Memorial 10 Number of manual orders 0 Number of electronic orders 15 Number of line items picked 120 25 30 0 250 Compute the total revenue that Tara would receive from University and Memorial.
Transcribed Image Text:Tara Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Tara sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Tara that had cost Tara $100 to buy from manufacturers, Tara would charge the hospital $105 to purchase these supplies. For years, Tara believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits Tara 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 below: Activity Cost Pool (Activity Measure) Customer deliveries (Number of deliveries) 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) Total selling and administrative expenses Total Cost Total Activity $500,000 5,000 deliveries $248,000 4,000 orders $200,000 12,500 orders $450,000 450,000 line items 602,000 $2,000,000 Tara gathered the data below for two of the many hospitals that it serves - University and Memorial (both hospitals purchased a total quantity of medical supplies that cost Tara $30,000 to buy from its manufacturers): Activity Measure Number of deliveries Activity University Memorial 10 Number of manual orders 0 Number of electronic orders 15 Number of line items picked 120 25 30 0 250 Compute the total revenue that Tara would receive from University and Memorial.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS