Question

Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundred
University Memorial 18 20 Activity measure Number of deliveries Number of manual orders Number of electronic orders Number of
Other organization-sustaining costs (None) Total selling and administrative expenses 670,000 $2,757,000 Worley gathered the d
Worley gathered the data below for two of the many hospitals that it serves-University and Memorial (each hospital purc medic
Number of manual orders Number of electronic orders Number of line items picked Required: 1. Compute the total revenue that W
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Answer #1

Answers

  • [1]

University

Memorial

Total

Cost of purchase

$                             39,000.00

$               39,000.00

$                     78,000.00

Margin

9%

9%

9%

Total Revenue

$                             42,510.00

$               42,510.00

$                     85,020.00

  • [2]

Activity Cost Pool (Activity Measure)

Total Cost

Total Activity

Activity Rates

Customer deliveries (Number of deliveries)

$                           567,000.00

7000

deliveries

$                                                81.00

per deliveries

Manual order processing (Number of manual orders)

$                           296,000.00

4000

orders

$                                                74.00

per orders

Electronic order processing (Number of electronic orders)

$                           288,000.00

12000

orders

$                                                24.00

per orders

Line item picking (Number of line items picked)

$                           936,000.00

480000

line items

$                                                   1.95

per line items

Other organization-sustaining costs (None)

$                           670,000.00

Total to be allocated

$                       2,757,000.00

  • [3]

Overhead cost assigned to:

University

$                               2,056.50

Memorial

$                               5,254.50

--Working

UNIVERSITY

Activity Cost Pool (Activity Measure)

Total Cost

Activity Rates

No. of cost drivers

Cost Allocated

Customer deliveries (Number of deliveries)

$                           567,000.00

$                       81.00

per deliveries

18

$                     1,458.00

Manual order processing (Number of manual orders)

$                           296,000.00

$                       74.00

per orders

0

$                                  -  

Electronic order processing (Number of electronic orders)

$                           288,000.00

$                       24.00

per orders

16

$                         384.00

Line item picking (Number of line items picked)

$                           936,000.00

$                          1.95

per line items

110

$                         214.50

Total Cost Allocated

$                     2,056.50

MEMORIAL

Activity Cost Pool (Activity Measure)

Total Cost

Activity Rates

No. of cost drivers

Cost Allocated

Customer deliveries (Number of deliveries)

$                           567,000.00

$                       81.00

per deliveries

20

$                     1,620.00

Manual order processing (Number of manual orders)

$                           296,000.00

$                       74.00

per orders

42

$                     3,108.00

Electronic order processing (Number of electronic orders)

$                           288,000.00

$                       24.00

per orders

0

$                                  -  

Line item picking (Number of line items picked)

$                           936,000.00

$                          1.95

per line items

270

$                         526.50

Total Cost Allocated

$                     5,254.50

  • [4]

University

Memorial

Total revenues

$                             42,510.00

$               42,510.00

Less:

Cost of Goods Sold

$                             39,000.00

$               39,000.00

Overhead cost allocated

$                               2,056.50

$                 5,254.50

Margin

$                               1,453.50

$               (1,744.50)

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