O?| Oezio.mheducationcom/hm.tpx Worley Company buys surgical supplies from a var
ID: 2509416 • Letter: O
Question
O?| Oezio.mheducationcom/hm.tpx Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 7% For example if a hospital buys supplies from Worley that had cost Worley $100 to buy from manufacturers, Worley would charge the hospital $107 to purchase these supplies. For years, Worley believed that the 7% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits Worley decided to implement an 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 Customer deliveries (Number of deliveries) Manual order processing (Number of manual orders) Electronic Line item picking-(Number of line items picked) Other organization-sustaining costs (None) S 435,000 5,000 deliveries 684,000 300,000 616,000 630,000 9,000 orders 12,000 orders 440,000 line items order processing (Number of electronic orders) Total selling and administrative expenses $2,665,000 Worley gathered the data below for two of the many hospitals that it serves-University and Memorial (both hospitals purchased a total quantity of medical supplies that had cost Worley $35,000 to buy from its manufacturers) Activity Memorial University 19 Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked 20 17 180 260 Required: 1. Compute the total revenue that Worley would receive from University and Memorial. Total Revenue Memorial Type here to search DOLLExplanation / Answer
1.
$35000 x 1.07 = $37450
2.
3.
4.
University = $37450 - $35000 - $2330 = $120
Memorial = $37450 - $35000 - $5448 = -$2998
Total Revenue University $37450 Memorial $37450Related Questions
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