Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospita

Question

2 years ago

8

Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospita

ls. 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 Activity Measure Total Cost Total ActivityCustomer deliveries Number of deliveries $ 361,900 4,700Manual order processing Number of manual orders 266,400 3700 Electronic order processing Number of electronic orders 191,540 12200 Line item picking Number of line items picked 518,000 370000 Total selling and administrative expenses $ 1,337,840 Med Max gathered the data below for two of the many hospitals that it servesâCity General and County General: Activity Activity Measure City General County GeneralNumber of deliveries 15 30Number of manual orders 0 60 Number of electronic orders 20 0 Number of line items picked 130 290 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.

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