Green Thumb Gardening is a small gardening service that uses activity-based cost

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 lawns, the size 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: The company has already completed its first stage allocations of costs and has summarized its annual costs and activity as follows: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.)

Explanation / Answer

Activity Cost Pool Estimated Overhead cost Expected activity Activity Rate A B A/B Caring for lawn Caring for garden beds - low maintenance 79400 180000 sq ft lawn 0.44 per sq ft lawn Caring for garden beds - high maintenance 32000 22000 sq ft beds-low maintenace 1.45 per sq ft beds-low maintenace Travel to jobs 44000 16000 sq ft beds-highmaintenance 2.75 per sq ft beds-highmaintenance Customer billing and service 4000 13000 miles 0.31 per mile 8300 36 customers 230.56 per customer

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