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: Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking Total selling and administrative expenses Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Total Activity 4,700 deliveries 3,700 orders Total Cost $ 361,900 266,400 191,540 518,000 370,000 line items $ 1,337,840 12,200 orders Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Required: Activity City General County General 15 30 0 60 20 130 0 290 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 1 Required 2 Required 2 Compute the total activity calculations.) It would be assigned to City General and County General. (Do not round intermediate Activity Cost Pool City General ABC Cost County General ABC Cost Customer deliveries Manual order processing Electronic order processing Line item picking Total activity costs

Assume a service company has implemented an activity-based costing system with five activities as shown below:  Activity Cost Pool (Activity Measure) Total Cost Total Activity Customer deliveries (Number of deliveries) $ 400,000 8,000 deliveries Manual order processing (Number of manual orders) $ 280,000 5,000 manual orders Electronic order processing (Number of electronic orders) $ 150,000 15,000 electronic orders Line item picking (Number of line items picked) $ 450,000 375,000 line items Other organization-sustaining costs (None) $ 300,000     The company serves numerous customers, two of which include Hospital A and Hospital B. The activity demands pertaining to these two customers are as follows:   Activity Measure Activity Hospital A Hospital B Number of deliveries 10 25 Number of manual orders 0 31 Number of electronic orders 15 0 Number of line items picked 120 250 How much cost would be assigned from the Manual Order Processing activity to…

Louis Clark, the new administrator for the surgical clinic, was trying to figure out how to allocate is indirect expenses.  His staff were complaining that the current method of taking a percentage of revenues was unfair.  He decided to try to allocate utilities expense based on square footage of each department, to allocate administration expense based on direct costs, and to allocate laboratory expense based on tests.  Using the information in Exhibit 12.11 below, calculate the total indirect costs (utilities, administration, and laboratory) allocated to the Day-Op Suite; Cystoscopy; and Endoscopy.   Exhibit 12-11                                             A   B   C           Square Feet   Dept. Costs   Lab Tests       Utilities       $400,000           Administration   4,000   $700,000           Laboratory   2,000   $750,000           Day-Op suite…

Pahros Company buys surgical supplies from a variety of manufacturers and the resells and delivers these supplies to hundreds of hospitals. Cleanwater sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For years the company believed that 5% mark-up covered its selling and administrative expenses and provided reasonable profit. However, in the face of declining profits, the company decided to implement activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown below: Activity Cost Pool Activity Driver Total Cost Total Activity Customer Deliveries Number of Deliveries $ 500,000 5,000 deliveries Manual order processing Number of manual orders $ 248,000 4,000 orders Electronic order processing Number of electronic orders $ 200,000 12,500 orders Line item picking Number of Line item picked $ 450,000 450,000 line…

Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation. Marley's ManufacturingIncome StatementMonth Ending August 31, 2018

Determine the total costs that each operating segment would be accountable for if the step method is used to allocate support costs; assume support departments are ranked according to their original cost. (Round intermediate calculations to 4 decimal places, e.g. 15.2516 and final answers to 2 decimal places, e.g. 15.25.) Total costs $ Operating Segments Institutional Taythank and Media. 776887.5 Retail 468712.5

Lucky Clothing creates and sells t-shirts that can be customized. The cost of sales order processing and shipping is calculated using activity-based costing at Lucky Clothing. The sales order processing activity has a $9 per sales order activity rate, and the shipping activity has a $18 per shipment activity rate. Lucky Clothing sold a total of 25,300 personalized t-shirts, including 4,000 orders and 1,300 shipping. The total activity cost is calculated through: Sales order activity costs = Number of orders * sales order activity rate = 4000*9 = $36,000Shipping Activity costs = Number of shipping * Shipping Activity rate= 1300*18 = $23400Total activity costs = Sales order activity costs + Shipping Activity costsWhile the per-unit sales order processing and shipping activity cost for customizable t-shirts is solved as follows:Per unit sales order processing costs = Sales order processing costs/ Number of t shirts = $36000 + $23400 = $59400 Per unit sales order processing costs = Sales…

Purchasing department cost drivers, activity-based costing, simple regression analysis. Perfect Fit operates a chain of 10 retail department stores. Each department store makes its own purchasing decisions. Carl Hart, assistant to the president of Perfect Fit, is interested in better understanding the drivers of purchasing department costs. For many years, Perfect Fit has allocated purchasing department costs to products on the basis of the dollar value of merchandise purchased. A $100 item is allocated 10 times as many overhead costs associated with the purchasing department as a $10 item. Hart recently attended a seminar titled “Cost Drivers in the Retail Industry.” In a presentation at the seminar, Kaliko Fabrics, a leading competitor that has implemented activity-based costing, reported number of purchase orders and number of suppliers to be the two most important cost drivers of purchasing department costs. The dollar value of merchandise purchased in each purchase order was not…

Note that data typically changes for each new question, even when the same company or product name is used. Tyler's Deli sells sandwiches to grocery stores in bulk. The company identified the following information for its activity-based costing system for the year. Activity Allocation Base Estimated Overhead Cost > Purchasing Number of purchase orders $150,000 Processing Direct labor hours 360,000 Sales Number of sales orders 90,000 The estimated activity level for each type of sandwich and in total is as follows: Turkey Pastrami Total Number of purchase orders 10,000 15,000 25,000 Direct labor hours 30,000 70,000 100,000 Number of sales orders 1,000 4,000 5,000 How much total overhead cost should be assigned to one order for 500 Pastrami sandwiches, if the order requires 4 purchase orders and 100 direct labor hours?

Mangi