Reference no: EM13646224

Use the following to answer questions:

Forliche Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity based costing system:

Overhead costs:

	Wages and salaries.............	$  80,000
	Other expenses...................	40,000
	Total...................................	$120,000

Distribution of resource consumption:

		Activity Cost Pools
		Making Bouquets	Delivery	Other	Total
	Wages and salaries....	60%	30%	10%	100%
	Other expenses..........	45%	25%	30%	100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.

The amount of activity for the year is as follows:

	Activity Cost Pool	Activity
	Making bouquets......	40,000	bouquets
	Delivery....................	5,000	deliveries

1. What would be the total overhead cost per bouquet according to the activity based costing system? In other words, what would be the overall activity rate for the making bouquets activity cost pool? (Round to the nearest whole cent.)

A) $1.65

B) $1.35

C) $1.58

D) $1.80

2. What would be the total overhead cost per delivery according to the activity based costing system? In other words, what would be the overall activity rate for the deliveries activity cost pool? (Round to the nearest whole cent.)

A) $7.20

B) $6.60

C) $6.00

D) $6.80