Question
In: Accounting
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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:
| Activity Cost Pool | Activity Measure |
| Caring for lawn | Square feet of lawn |
| Caring for garden beds–low maintenance | Square feet of low maintenance beds |
| Caring for garden beds–high maintenance | Square feet of high maintenance beds |
| Travel to jobs | Miles |
| Customer billing and service | Number of customers |
The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows:
| Activity Cost Pool |
Estimated Overhead Cost |
Expected Activity | ||
| Caring for lawn | $ | 82,600 | 190,000 | square feet of lawn |
| Caring for garden beds–low maintenance | $ | 35,200 | 26,000 | square feet of low maintenance beds |
| Caring for garden beds–high maintenance | $ | 54,800 | 20,000 | square feet of high maintenance beds |
| Travel to jobs | $ | 3,800 | 17,000 | miles |
| Customer billing and service | $ | 7,900 | 26 | customers |
Required:
Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.)
Solutions
Expert Solution
Formula for activity rate is:
Activity rate = Estimated overhead/estimated cost driver
Overhead rate of caring for lane = $ 82,600/190,000 = $ 0.4347368 or $ 0.43 per sq. feet
Overhead rate of Caring for garden beds–low maintenance
= $ 35,200/26,000 = $ 1.353846 or $ 1.35 per sq. feet
Overhead rate of Caring for garden beds–high maintenance = $ 54,800/ 20,000
= $ 2.74 per sq. feet
Overhead rate of Travel to jobs = $ 3,800/ 17,000 = $ 0.223529412 or $ 0.22per miles
Overhead rate of Customer billing and service = $ 7,900/ 26 = $ 303.8461538 or $ 303.85 per customer
ekkarill92 answered 1 year agoRelated Solutions
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for...
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...
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