Exercise 7-3 Compute Activity Rates [LO3]
As You Like It Gardening is a small gardening service that usesactivity-based costing to estimate costs for pricing and otherpurposes. The proprietor of the company believes that costs aredriven primarily by the size of customer lawns, the size ofcustomer garden beds, the distance to travel to customers, and thenumber of customers. In addition, the costs of maintaining gardenbeds depends on whether the beds are low-maintenance beds (mainlyordinary trees and shrubs) or high-maintenance beds (mainly flowersand exotic plants). Accordingly, the company uses the five activitycost pools listed below:
Activity CostPool ActivityMeasure Caring for lawn Square feet oflawn Caring for gardenbedsâlow maintenance Square feet oflow-maintenance beds Caring for gardenbedsâhigh maintenance Square feet ofhigh-maintenance beds Travel to jobs Miles Customer billing andservice Number ofcustomers
The company has already completedits first-stage allocations of costs. The companyâs annual costsand activities are summarized as follows:
Activity CostPool Estimated
Overhead
Cost Expected Activity Caring for lawn $ 81,000 160,000 square feet of lawn Caring for gardenbedsâlow maintenance $ 33,600 25,000 square feet of low-maintenancebeds Caring for gardenbedsâhigh maintenance $ 51,680 19,000 square feet of high-maintenancebeds Travel to jobs $ 4,600 16,000 miles Customer billing andservice $ 9,500 20 customers
Required: Compute the activity rate for each of the activity cost pools.(Round your answers to 2 decimalplaces.Omit the "$" sign in yourresponse.)
Activity CostPool Activity Rate Caring for lawn $ per square foot of lawn Caring for gardenbedsâlow maintenance $ per square foot of lowmaintenance beds Caring for gardenbedsâhigh maintenance $ per square foot of highmaintenance beds Travel to jobs $ per mile Customer billing andservice $ per customer
| Exercise 7-3 Compute Activity Rates [LO3]
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Related questions
As You Like It Gardening is a small gardening service that usesactivity-based costing to estimate costs for pricing and otherpurposes. The proprietor of the company believes that costs aredriven primarily by the size of customer lawns, the size ofcustomer garden beds, the distance to travel to customers, and thenumber of customers. In addition, the costs of maintaining gardenbeds depends on whether the beds are low-maintenance beds (mainlyordinary trees and shrubs) or high-maintenance beds (mainly flowersand exotic plants). Accordingly, the company uses the five activitycost pools listed below:
| Activity Cost Pool | ActivityMeasure |
| Caring for lawn | Square feet of lawn |
| Caring for garden bedsâlow maintenance | Square feet of low-maintenance beds |
| Caring for garden bedsâhigh maintenance | Square feet of high-maintenance beds |
| Travel to jobs | Miles |
| Customer billing and service | Number of customers |
The company has already completedits first-stage allocations of costs. The companyâs annual costsand activities are summarized as follows: |
| Activity Cost Pool | Estimated Overhead Cost | Expected Activity | ||
| Caring for lawn | $ | 88,200 | 165,000 | square feet oflawn |
| Caring for garden bedsâlow maintenance | $ | 40,800 | 25,000 | square feet oflow-maintenance beds |
| Caring for garden bedsâhigh maintenance | $ | 51,110 | 19,000 | square feet ofhigh-maintenance beds |
| Travel to jobs | $ | 4,200 | 16,000 | miles |
| Customer billing and service | $ | 8,700 | 32 | customers |
| Required: |
Compute the activity rate for each of the activity cost pools.(Round your answers to 2 decimalplaces.) |
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 bedsâlow maintenance | Square feet of low maintenance beds |
| Caring for garden bedsâhigh 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 | 175,000 | square feet of lawn | |||||||||||||||||||||
| Caring for garden bedsâlow maintenance | $ | 35,200 | 22,000 | square feet of low maintenance beds | |||||||||||||||||||||
| Caring for garden bedsâhigh maintenance | $ | 43,040 | 16,000 | square feet of high maintenance beds | |||||||||||||||||||||
| Travel to jobs | $ | 4,000 | 13,000 | miles | |||||||||||||||||||||
| Customer billing and service | $ | 8,300 | 32 | customers | |||||||||||||||||||||
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