Exercise 7-3 Compute Activity Rates [LO7-3] Green Thumb Gardening is a small gar

Question

Exercise 7-3 Compute Activity Rates [LO7-3] 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 Caring for lawn Square feet of low maintenance Caring for garden beds-low Caring for garden beds-high Travel to jobs Square feet of high maintenance Customer billing and service Number of customers The company has already completed its first stage allocations of costs and has summarized its annual costs and activity as follows: Activity Cost Pool Caring for lawn Caring for garden beds low Cost $83,400 $36,000 Expected Activity 190,000 square feet of lawn square feet of low 24,000maintenance beds Caring for garden beds-high square feet of high $49,140 18,000mantenance beds Travel to jobs Customer billing and service S 3,400 5,000 miles 7,100 32 customers Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Cost Pool re foot of lawn Caring for garden beds-low maintenance per square foot of low maintenance beds Caring for garden beds-high per square foot of high maintenance beds Travel to jobs per mile and service

Explanation / Answer

Caring for lawn 0.44 =83400/190000 Caring for garden beds-low maintenance 1.50 =36000/24000 Caring for garden beds-high maintenance 2.73 =49140/18000 Travel to jobs 0.23 =3400/15000 Customer billing and services 221.88 =7100/32

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