Required:Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places except customer billing andservice.)Activity Cost PoolActivity RateCaring for lawnper square ft of lawnCaring for garden beds-low maintenanceper square ft of low maintenance bedsCaring for garden beds-high maintenanceper square ft of high maintenance bedsTravel to jobsper mileCustomer billing and serviceper customer 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 gardenbeds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends onwhether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exoticplants). Accordingly, the company uses the five activity cost pools listed below:Activity Cost PoolCaring for lawnCaring for garden beds-low maintenanceCaring for garden beds-high maintenanceTravel to jobsCustomer billing and serviceActivity MeasureSquare feet of lawnSquare feet of low maintenance bedsSquare feet of high maintenance bedsMilesNumber of customersThe company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows:EstimatedOverheadActivity Cost PoolCaring for lawnCaring for garden beds-low maintenanceCaring for garden beds-high maintenanceTravel to jobsCustomer billing and serviceCostExpected Activity$ 72,000$ 26,400$ 41,400$ 3,250$ 8,750150,000 square feet of lawn20,000 square feet of low maintenance beds15,000 square feet of high maintenance beds12,500 miles25 customers

The activity rate is calculated as estimated overhead cost for each activity divided by expected…

Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places except customer billing service.) Activity Cost Pool Activity Rate Caring for lawn per square ft of lawn Caring for garden beds-low maintenance per square ft of low maintenance beds Caring for garden beds-high maintenance per square ft of high maintenance beds Travel to jobs per mile Customer billing and service per customer

Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places except customer billing service.) Activity Cost Pool Activity Rate Caring for lawn per square ft of lawn Caring for garden beds-low maintenance per square ft of low maintenance beds Caring for garden beds-high maintenance per square ft of high maintenance beds Travel to jobs per mile Customer billing and service per customer

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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Life Force Fitness, Inc., assembles and sells treadmills. Activity-based product information for each treadmill is as follows: ETT Activity-Base Usage (hrs. per unit) Activity Rate per Hour Activity Motor assembly Activity Cost $30.00 1.50 $20 Final assembly Testing 1.00 18 18.00 0.25 22 5.50 Rework 0.40 22 8.80 Moving Activity cost per unit 3.00 $65.30 0.20 15 All of the activity costs are related to labor. Management must remove $2.00 of activity cost from the product in order to remain competitive. Rework involves disassembling and repairing a unit that fails testing. Not all units require rework, but the average is 0.40 hour per unit. Presently, the testing is done on the completed assembly; but much of the rework has been related to motors, which can be tested independently prior to adding the motor to the treadmill during final assembly. Thus, motor issues can be diagnosed and solved without having to disassemble the complete treadmill. This change will reduce the average rework…
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