Question: Exercise 4 - 9 ( Static ) Compute and Use Activity Rates to Determine the Costs of Serving Customers [ LO 4 - 2 ,

Exercise 4-9(Static) Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO4-2, LO4-3]
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:
\table[[Activity Cost Pool,Activity Measure,Total Cost,Total Activity],[Customer deliveries,Number of deliveries,$400,000,5,000 deliveries],[Manual order processing,Number of manual orders,300,000,4,000 orders],[Electronic order processing,Number of electranic orders,200,000,12,500 orders],[Line item picking,Number of line items picked,500,000,400,000 line items],[Total selling and administrative expenses,,$1,400,000,]]
Med Max gathered the data below for two of the many hospitals that it serves-City General and County General:
\table[[,Activity],[,City,County],[Activity Measure,General,General],[Number of deliveries,10,20],[Number of manual orders,0,40],[Number of electronic orders,10,0],[Number of line items picked,100,260]]
Required:
Compute the activity rate for each activity cost pool.
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 2
Compute the total activity costs that would be assigned to City General and County General. (Do not round intermediate calculations.)
 Exercise 4-9(Static) Compute and Use Activity Rates to Determine the Costs

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!