Question

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. Metivity coat Pool Customer deliveries Manual order processing Electronie order processing Line item picking Total selling and administrative expenses Activity Measure Number of deliveries Number of manual orders Number of electronie orders Number of line items picked Total Cost $ 510, 400 399.400 223.440 $28.000 $1,660.240 Total Activity 5,800 deliveries 4.800 orders 13.300 orders 480,000 line items Med Max gathered the data below for two of the many hospitals that it serves-City General and County General Motivity City County General General 20 Motivity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line Items picked 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 Complete this question by entering your answers in the tabs below. Required: Required 2 Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)

Answer 1

1.

Activity Cost Pool	Activity Rate
Customer deliveries	$ 88	per delivery
Manual order processing	$ 83	per manual order
Electronic order processing	$ 16.80	per electronic order
Line item picking	$ 1.10	per line item picked

2.

	ABC Cost
Activity Cost Pool	City General	County General
Customer deliveries	$ 1,760	$ 3,520
Manual order processing	0	6,640
Electronic order processing	252	0
Line item picking	143	319
Total activity costs	$ 2,155	$ 10,479