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 The company completed its first-stage cost allocations and summarized its annual costs and activity as follows: 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 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 Estimated Overhead Cost $ 87,400 $ 40,000 $ 47,430 $4,200 $ 8,700 Required: Compute the activity rate for each of the activity cost pools. Note: 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 22 customers per square feet of lawn per square feet of low-maintenance beds per square feet of high-maintenance beds per mile per customer
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 The company completed its first-stage cost allocations and summarized its annual costs and activity as follows: 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 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 Estimated Overhead Cost $ 87,400 $ 40,000 $ 47,430 $4,200 $ 8,700 Required: Compute the activity rate for each of the activity cost pools. Note: 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 22 customers per square feet of lawn per square feet of low-maintenance beds per square feet of high-maintenance beds per mile per customer
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
Chapter2: Basic Managerial Accounting Concepts
Section: Chapter Questions
Problem 6MCQ: Which of the following is an indirect cost? a. The cost of denim in a jeans factory b. The cost of...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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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
The company completed its first-stage cost allocations and summarized its annual costs and activity as follows:
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
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
Estimated Overhead
Cost
$ 87,400
$ 40,000
$ 47,430
$ 4,200
$8,700
Required:
Compute the activity rate for each of the activity cost pools.
Note: 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
22 customers
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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