Question

Accounting help please !

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 Total selling and administrative expenses Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Total Cost $ 426,400 323,480 205,740 567,200 $ 1,522,540 Total Activity 5 , 200 deliveries 4,209 orders 12,700 orders 420,680 line items Med Max gathered the data below for two of the many hospitals that it serves-City General and County General Activity City County General General ze Activity Measure Number of deliveries Number of manual orders ber of electronic orders Number of line itens picked 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 decimal places.) Customer delivere Manual order processing Electronic oder proces Line Rompicking Activity Roto d elver por order perchonk order Required 2

Answer 1

Answer

1)

Activity Cost Pool	Activity Rate
Customer deliveries	82 (426400/5200)	per delivery
Manual order processing	77 (323400/4200)	per manual order
Electronic order processing	16.2 (205740/12700)	per electronic order
Line item picking	1.35 (567000/420000)	per line item picked

2)

	ABC Cost
Activity Cost Pool	City General	Country General
Customer deliveries	1640	3280
Manual order processing	0	3080
Electronic order processing	243	0
Line item picking	162	378
Total activity costs	2045	6738

working note

	Number of activity measure			ABC cost
Activity Cost Pool	City General	Country General	Activity Rate	City General	Country General
Customer deliveries	20	40	82	1640	3280
Manual order processing	0	40	77	0	3080
Electronic order processing	15	0	16.2	243	0
Line item picking	120	280	1.35	162	378