Question

Green Thumb Gardening is a small gardening service that uses activity based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer laws the wipe of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants Accordingly, the company uses the five activity cost pools listed below. Activity Measure Sun feet of law Auty Cost Pool Caring for lawn Caring for garden belowa nce Caring for garden beds high marance Travel to jobs Customer billing and service Sourt of high m ancebeds The company has already completed its first stage allocations of costs and has summarized its annual costs and activity as follows: Estimated Activity Cow Pool Caring for law Caring for garden beds low manance Caring for garden behigh maintenance Travel to jobs Customer bing and service Expected Activity 160.000 square feet of lawn 27,000 square feet of low manance beds 21.000 foot of high maintenance beds 18.000 miles $ 7500 Required: Compute the activity rate for each of the activity cost pools (Round your answers to 2 decimal places) Activity Rate Activity Cost Peel Caring for Caring for garden Caring for garden Customer billing and ser

Answer 1

Ans:

Activity rate=Total respective overhead cost/Total respective activity

	Activity Rate
Caring for lawn	(80200/160000)=$0.50	per square ft of lawn
Caring for garden beds—low maintenance	(32800/27000)=$1.21	per square ft of low maintenance beds
Caring for garden beds—high maintenance	(60060/21000)=$2.86	per square ft of high maintenance beds
Travel to jobs	(3600/18000)=0.2	per mile
Customer billing and service	(7500/28)=267.86(Approx)	per customer

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