Problem No 7-19

EXERCISE: 7-9

1.Total Revenue Received:

Cost of goods sold to the hospital (a)

Markup percentage
Markup in dollars (b)
Revenue received from hospitals (a) + (b)

2.Activity Rates
Activity Cost Pool
Customer delevieries
Manual order processing
Electronic order processing
Line item picking

3.Activity costs are assigned to the two hospitals:

City General:
Activity Cost Pool
Customer deliviries
Manual order processing
Electronic order processing
Line item picking
Total activity costs

County General:
Activity Cost Pool
Customer deliviries
Manual order processing
Electronic order processing
Line item picking
Total activity costs

4.Customer margins for the two hospitals:

Sales
Cost of goods sold
Gross margin
Customer deliveries
Manual order processing
Electronic order processing
Line item picking
Total activity costs
Customer margin
 Ahmed Hassan
Roll no 8
Bs Islamic Finance
Chapter 7

Removing Asbestos
Wages and salaries 80000
Disposal fees 420000
Equipment depreciation 40000
On-site supplies 33000
Office expenses 19000
Licensing and insurance 185000

TOTAL 777000

A
Activity Cost Pools Total Cost

Removing Asbestos 777000

Estimating & Job Setup 105000
Working on Non-routine Jobs 499000
Other 119000

City General County General

30,000 30,000
5% 5%
1500 1500
31,500 31,500
Estimated Overhead Cost (a) Expected Activity (b) Activity Rate (a) / (b)
400,000 $5,000 $80
300,000 $4,000 $75
200,000 12,500 $16
500,000 400,000 $1

Activity Rate Activity ABC Cost

$80 10 $800
$75 0 $0
$16 10 $160
$1.25 100 $125
$1,085

Activity Rate Activity ABC Cost

$80 20 $1,600
$75 40 $3,000
$16 0 $0
$1.25 260 $325
$4,925

City General County General

31500 31500
30000 30000
1500 1500
800 1600
0 3000
160 0
125 325
1085 4925
415 -3425
 Distribution of Resource Consumption Across Activities

Estimating and Job Setup Working on Nonroutine Jobs Other Total

20000 70000 30000 200000
0 180000 0 600000
0 32000 8000 80000
9000 12000 6000 60000
76000 57000 38000 190000
0 148000 37000 370000

105000 499000 119000 1500000

B A/B
total Activity Activity Rate

500 Thousand square feet 1554 Per Thousand Square Feet

200 jobs 525 Per Jobs
25 nonroutine jobs 19960 Per non routne Jobs
0 Not Applicable 0 Not Applicable
 From Question

Removing Asbestos Estimating and Job Setup

Wages and salaries 0.4 0.1
Disposal fees 0.7 0
Equipment depreciation 0.5 0
On-site supplies 0.55 0.15
Office expenses 0.1 0.4
Licensing and insurance 0.5 0
Working on Nonroutine Jobs Other Total
0.35 0.15 1
0.3 0 1
0.4 0.1 1
0.2 0.1 1
0.3 0.2 1
0.4 0.1 1