Green Thumb Gardening is a small gardening service that uses activity-based cost
ID: 2512496 • Letter: G
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 gardern 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 Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to job Customer billing and service Activity Measure Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds Number of customers The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows Estimated Overhead Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Expected Activity Cost $ 86,600 170,000 square feet of lawn $ 39,200 24,000 square feet of low maintenance beds $ 49,680 18,000 square feet of high maintenance beds $ 3,200 15,000 miles $ 6,700 36 customers Required Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.)Explanation / Answer
Caring for lawn 0.51 =86600/170000 Caring for garden beds-low maintenance 1.63 =39200/24000 Caring for garden beds-high maintenance 2.76 =49680/18000 Travel to jobs 0.21 =3200/15000 Customer billing and service 186.11 =6700/36
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