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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 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.

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.

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 Electronic order processing Line item picking Activity Measure Total Cost Total Activity Number of deliveries Number of manual orders Number of electronic orders Number of line items picked 4,400 deliveries 3,400 orders 11,900 orders 340, 000 line items 325,600 234, 600 183, 260 408,000 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: Activity City County General Activity Measure Number of deliveries General 15 30 Number of manual orders 60 umber 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Customer deliveries per delivery per manual order Manual order processing per electronic order Electronic order processing per line item picked Line item picking
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 Electronic order processing Line item picking Activity Measure Total Cost Total Activity Number of deliveries Number of manual orders Number of electronic orders Number of line items picked 4,400 deliveries 3,400 orders 11,900 orders 340, 000 line items 325,600 234, 600 183, 260 408,000 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: Activity City County General Activity Measure Number of deliveries General 15 30 Number of manual orders 60 umber 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Customer deliveries per delivery per manual order Manual order processing per electronic order Electronic order processing per line item picked Line item picking
Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking Activity Measure Total Cost Number of deliveries Number of manual orders Number of electronic orders Total Activity 4,400 3,400 orders 11,900 orders 24 325,600 234,600 183, 260 408,000 deliveries Number of line items picked Total selling and administrative expenses 340,000 line items $ 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 Number of electronic orders Number of line items picked 15 30 60 15 110 270 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.) ABC Cost Activity Cost Pool City General County General Customer deliveries Manual order processing Electronic order processing Line item picking Total activity costs Renuired 1
Transcribed Image Text:Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking Activity Measure Total Cost Number of deliveries Number of manual orders Number of electronic orders Total Activity 4,400 3,400 orders 11,900 orders 24 325,600 234,600 183, 260 408,000 deliveries Number of line items picked Total selling and administrative expenses 340,000 line items $ 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 Number of electronic orders Number of line items picked 15 30 60 15 110 270 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.) ABC Cost Activity Cost Pool City General County General Customer deliveries Manual order processing Electronic order processing Line item picking Total activity costs Renuired 1
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