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 Activity Measur Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds Miles 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 billina and service Cost Expected Activity $87,400 180,000 square feet of lawn s40, 000 25,000 square feet of low maintenance beds square feet of high maintenance $52,060 19, 000 3, 600 16,000 miles s 7.500 34 cust.omers Prev 1 of 3 Next >

Explanation / Answer

Activity rate Caring for lawn 0.49 =87400/180000 Caring for garden beds-low maintenance 1.60 =40000/25000 Caring for garden beds-high maintenance 2.74 =52060/19000 Travel to jobs 0.23 =3600/16000 Customer billing and service 220.59 =7500/34

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