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 maintenancebeds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below:Required:Compute the activity rate for each of the activity cost pools. Activity Cost PoolActivity MeasureCaring for lawn ...Caring for garden beds-low maintenanceCaring for garden beds-high maintenanceSquare feet of lawnSquare feet of low maintenance bedsSquare feet of high maintenance bedsTravel to jobs .......Customer billing and serviceMilesNumber of customersThe company already has completed its first stage allocations of costs and has summarized itsannual costs and activity as follows:EstimatedOverheadActivity Cost PoolCostExpected ActivityCaring for lawn ...$72,000 150,000 square feet of lawnCaring for garden beds-lowmaintenance ..$26,40020,000 square feet of low maintenance bedsCaring for garden beds-high$41,400$3,250$8,75015,000 square feet of high maintenance beds12,500 milesmaintenanceTravel to jobs .....Customer billing and service...25 customers

Calculate the activity rate for carrying for lawn:

Answered: Activity Cost Pool Activity Measure…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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:

Required:
Compute the activity rate for each of the activity cost pools.

Activity Cost Pool
Activity Measure
Caring for lawn ...
Caring for garden beds-low maintenance
Caring for garden beds-high maintenance
Square feet of lawn
Square feet of low maintenance beds
Square feet of high maintenance beds
Travel to jobs .......
Customer billing and service
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
Cost
Expected Activity
Caring for lawn ...
$72,000 150,000 square feet of lawn
Caring for garden beds-low
maintenance ..
$26,400
20,000 square feet of low maintenance beds
Caring for garden beds-high
$41,400
$3,250
$8,750
15,000 square feet of high maintenance beds
12,500 miles
maintenance
Travel to jobs .....
Customer billing and service...
25 customers

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