Question: Exercise 4 - 9 ( Static ) Compute and Use Activity Rates to Determine the Costs of Serving Customers [ LO 4 - 2 ,
Exercise Static Compute and Use Activity Rates to Determine the Costs of Serving Customers LO LO
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 activitybased 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:
tableActivity Cost Pool,Activity Measure,Total Cost,Total ActivityCustomer deliveries,Number of deliveries,$ deliveriesManual order processing,Number of manual orders, ordersElectronic order processing,Number of electranic orders, ordersLine item picking,Number of line items picked, line itemsTotal selling and administrative expenses,,$
Med Max gathered the data below for two of the many hospitals that it servesCity General and County General:
tableActivityCity,CountyActivity Measure,General,GeneralNumber of deliveries,Number of manual orders,Number of electronic orders,Number of line items picked,
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.
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Required
Compute the total activity costs that would be assigned to City General and County General. Do not round intermediate calculations.
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