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 live 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 Expected Use of Cost Drivers per Activity Activity Rate [a] [b] [c] [b/c] Caring for Lawn 80,200 175,000                                        0.46 per Square foot of lawn Caring for Garden Bed - Low Maiantenance 32,800 29,000                                        1.13 per Square foot of Low Maiantenance Bed Caring for Garden Bed - High Maintenance 61,870 23,000                                        2.69 per Square foot of High Maiantenance Bed Travel to Job 5,000 20,000                                        0.25 Per Mile Customer Billing and services 10,300 26                                   396.15 Per Customer

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