Worley Company buys surgical suppli

Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospital. Worley sets its prices for all hospital by making up its cost of good sold to those hospital by 5%. For example, if a hospital buys supplies from Worley that had cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies.
For years, Worley believed that the 5% markup covered its selling and administrative expanses and provided a reasonable profit. However, in the face of declining profits Worley decided to implement an activity-bases costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown below:

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Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospital. Worley sets its prices for all hospital cost making by its up of good sold to those hospital by For example 5%. a if hospital buys supplies from Worley that had cost Worley $100 to buy from manufacturers Worley,Would charge the hospital $105 to purchase these supplies.
For years Worley, believed that the markup 5% covered its selling and administrative expanses and provided profit. reasonable However in a, the face profits declining of Worley decided to implement an activity-bases costing system to help improve its understanding of customer profitability. WorleyCompany broke its selling and administrative expenses into five activities as shown The below: