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.)

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:

Explanation / Answer

The correct answer is :

Note :

Activity Cost Pool Activity Rate   Caring for lawn 0.52 per square feet of lawn   Caring for garden beds–low maintenance 1.54 Per square feet of low maintenance beds   Caring for garden beds–high maintenance 2.80 Per square feet of high maintenance beds   Travel to jobs 0.23 Per mile   Customer billing and service 197.37 Per customer

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