Green Thumb Gardening is a small gardening service using activity-based costing to estimate costs for pricing and other purposes. The owner of the company believes 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 depend 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 Measure Square feet of lawn Square feet of low-maintenance beds Square feet of high-maintenance beds Miles Number of customers The company completed its first-stage cost allocations and summarized its annual costs and activity as follows: Estimated Overhead Activity Cost Pool Cost Caring for lawn $ 87,400 Caring for garden beds-low maintenance $ 40,000 Caring for garden beds-high maintenance $ 60,060 Travel to jobs $ 4,000 $ 8,300 customers Expected Activity 175,000 square feet of lawn 28,000 square feet of low-mair 22,000 square feet of high-mai 19,000 miles 38 Customer billing and service Required: Compute the activity rate for each of the activity cost pools. Note: Round your answers to 2 decimal places. 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 Rate per square feet of lawn per square feet of low-maintenance beds per square feet of high-maintenance beds per mile per customer
Green Thumb Gardening is a small gardening service using activity-based costing to estimate costs for pricing and other purposes. The owner of the company believes 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 depend 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 Measure Square feet of lawn Square feet of low-maintenance beds Square feet of high-maintenance beds Miles Number of customers The company completed its first-stage cost allocations and summarized its annual costs and activity as follows: Estimated Overhead Activity Cost Pool Cost Caring for lawn $ 87,400 Caring for garden beds-low maintenance $ 40,000 Caring for garden beds-high maintenance $ 60,060 Travel to jobs $ 4,000 $ 8,300 customers Expected Activity 175,000 square feet of lawn 28,000 square feet of low-mair 22,000 square feet of high-mai 19,000 miles 38 Customer billing and service Required: Compute the activity rate for each of the activity cost pools. Note: Round your answers to 2 decimal places. 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 Rate per square feet of lawn per square feet of low-maintenance beds per square feet of high-maintenance beds per mile per customer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Green Thumb Gardening is a small gardening service using activity-based costing to estimate costs for
pricing and other purposes. The owner of the company believes 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 depend 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 Measure
Square feet of lawn
Square feet of low-maintenance beds
Square feet of high-maintenance beds
Miles
Number of customers
The company completed its first-stage cost allocations and summarized its annual costs and activity as
follows:
Estimated Overhead
Activity Cost Pool
Cost
Caring for lawn
$ 87,400
Caring for garden beds-low maintenance
$ 40,000
Caring for garden beds-high maintenance
$ 60,060
Travel to jobs
$ 4,000
$ 8,300
customers
Expected Activity
175,000 square feet of lawn
28,000 square feet of low-mair
22,000 square feet of high-mai
19,000 miles
38
Customer billing and service
Required:
Compute the activity rate for each of the activity cost pools.
Note: Round your answers to 2 decimal places.
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 Rate
per square feet of lawn
per square feet of low-maintenance beds
per square feet of high-maintenance beds
per mile
per customer
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