Determine the activity rate -activity cost pools

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Reference no: EM1311675

Allocation of costs using Activity Based Costing.

As You Like It 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 cost 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	Activity Measure
Caring for lawn	Square feet of lawn
Caring for garden beds-low maintenance	Square feet of low-maintenance beds
Caring for garden beds-high maintenance	Square feet of high-maintenance beds
Travel to jobs	Miles
Customer billing and service	Number of customers

The company has already carried out its first-stage allocations of costs. The company's annual costs and activities are summarized as follows:

Activity cost Pool	Estimated Overhead Cost	Expected Activity
Caring for lawn	$77400	180,000 square feet of lawn
Caring for garden beds-low maintenance	$30000	24,000 square feet of low-maintenance beds
Caring for garden beds high maintenance	$57600	18,000 square feet of high-maintenance beds
Travel to jobs	$4200	15,000 miles
Customer billing and service	$8700	30 customers

Required:
Compute the activity rate for each of the activity cost pools. (Omit the "$" sign in your response. Round your answers to 2 decimal places.)

Activity Cost Pool	Activity Rate
Caring for lawn	$0.43 per square foot of lawn
Caring for garden beds- low maintenance	$1.25 per square foot of low maintenance beds
Caring for garden beds- high maintenance	$3.2 per square foot of high maintenance beds
Travel to jobs	$0.28 per mile
Customer billing and service	$290 per customer

Reference no: EM1311675

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