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Exercise 5-3 (Algo) Compute Activity Rates [LO5-3] 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 Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service The company already has completed its first-stage allocations of costs and has summarized its annual costs and activity as follows: Estimated Overhead Cost Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds Miles Number of customers Caring for garden beds-high maintenance Travel to jobs Customer billing and service Activity Measure $82,600 $ 35, 200 $ 46, 410 $ 4,000 $ 8,300 Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Rate Expected Activity 185,000 square feet of lawn 23,000 square feet of low maintenance beds 17,000 square feet of high maintenance beds 14,000 miles 24 customers per square ft of lawn per square ft of low maintenance beds per square ft of high maintenance beds per mile per customer

Exercise 5-3 (Algo) Compute Activity Rates [LO5-3] 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 Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service The company already has completed its first-stage allocations of costs and has summarized its annual costs and activity as follows: Estimated Overhead Cost Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds Miles Number of customers Caring for garden beds-high maintenance Travel to jobs Customer billing and service Activity Measure $82,600 $ 35, 200 $ 46, 410 $ 4,000 $ 8,300 Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Rate Expected Activity 185,000 square feet of lawn 23,000 square feet of low maintenance beds 17,000 square feet of high maintenance beds 14,000 miles 24 customers per square ft of lawn per square ft of low maintenance beds per square ft of high maintenance beds per mile per customer

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 26BEB: Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function...
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Exercise 5-3 (Algo) Compute Activity Rates [LO5-3] 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 Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service The company already has completed its first-stage allocations of costs and has summarized its annual costs and activity as follows: Estimated Overhead Cost $82,600 $ 35, 200 $ 46, 410 $ 4,000 $ 8,300 Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Activity Measure Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds Miles Number of customers Caring for garden beds-high maintenance Travel to jobs Customer billing and service Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Rate Expected Activity 185,000 square feet of lawn 23,000 square feet of low maintenance beds 17,000 square feet of high maintenance beds 14,000 miles 24 customers per square ft of lawn per square ft of low maintenance beds per square ft of high maintenance beds per mile per customer
Transcribed Image Text:Exercise 5-3 (Algo) Compute Activity Rates [LO5-3] 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 Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service The company already has completed its first-stage allocations of costs and has summarized its annual costs and activity as follows: Estimated Overhead Cost $82,600 $ 35, 200 $ 46, 410 $ 4,000 $ 8,300 Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Activity Measure Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds Miles Number of customers Caring for garden beds-high maintenance Travel to jobs Customer billing and service Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Rate Expected Activity 185,000 square feet of lawn 23,000 square feet of low maintenance beds 17,000 square feet of high maintenance beds 14,000 miles 24 customers per square ft of lawn per square ft of low maintenance beds per square ft of high maintenance beds per mile per customer
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