Question

Save & Exit Subm Foster Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity-based costing system: Overhead costs: Wages and salaries Other expenses $ 70,000 50,000 $120,000 Total Distribution of resource consumption Activity Cost Pools Making Total Other Delivery 20% 25% Bouquets 70% 100% 10% Wages and salaries 100% 30% 45% Other expenses The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs The amount of activity for the year is as follows: Activity Activity Cost Pool The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs The amount of activity for the year is as follows Activity Cost Pool Making bouquets Delivery Activity 40,000 bouquets 1,000 deliveries What would be the total overhead cost per bouquet according to the activity-based costing system? In other words what would be the overall activity rate for the making bouquets activity cost pool? (Round to the nearest whole cent) Multiple Choice $1.79 $2.10 Next > 4 of 30 İll

Answer 1

Total overhead cost for per bouquet = Total cost associated with bouquet / Total activity of bouquet

Total cost = 70000 * 70% = $49000

50000 * 45% = $22500

Total cost = $71500

Total Bouquet activity = 40000

Overhead rate = $71500 / 40000

= $1.79