Activity-Based Costing EXERCISE 7-3 Compute Activity Rates [LO3] 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 costs 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.. Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs... .. Customer billing and service. Square feet of lawn Square feet of low-maintenance beds Square feet of high-maintenance beds Miles Number of customers The company has already completed its first-stage allocations of costs. The company's annual costs and activities are summarized as follows: Estimated Overhead Activity Cost Pool Cost Expected Activity Caring for lawn.. Caring for garden beds-low maintenance. $77,400 180,000 square feet of lawn $30,000 24,000 square feet of low-maintenance beds Caring for garden beds-high maintenance. Travel to jobs.. Customer billing and service.. $57,600 $4,200 $8,700 18,000 square feet of high-maintenance beds 15,000 miles 30 customers Required: Compute the activity rate for each of the activity cost pools.
Activity-Based Costing EXERCISE 7-3 Compute Activity Rates [LO3] 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 costs 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.. Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs... .. Customer billing and service. Square feet of lawn Square feet of low-maintenance beds Square feet of high-maintenance beds Miles Number of customers The company has already completed its first-stage allocations of costs. The company's annual costs and activities are summarized as follows: Estimated Overhead Activity Cost Pool Cost Expected Activity Caring for lawn.. Caring for garden beds-low maintenance. $77,400 180,000 square feet of lawn $30,000 24,000 square feet of low-maintenance beds Caring for garden beds-high maintenance. Travel to jobs.. Customer billing and service.. $57,600 $4,200 $8,700 18,000 square feet of high-maintenance beds 15,000 miles 30 customers Required: Compute the activity rate for each of the activity cost pools.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter11: Strategic Cost Management
Section: Chapter Questions
Problem 11E: Assign the customer-related activity costs to each customer type using activity rates. Now calculate...
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![Activity-Based Costing
EXERCISE 7-3 Compute Activity Rates [LO3]
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 costs 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.
Caring for garden beds-low maintenance
Caring for garden beds-high maintenance
Travel to jobs .
Customer billing and service
Square feet of lawn
Square feet of low-maintenance beds
Square feet of high-maintenance beds
Miles
Number of customers
The company has already completed its first-stage allocations of costs. The company's annual
costs and activities are summarized as follows:
Estimated
Overhead
Activity Cost Pool
Cost
Expected Activity
Caring for lawn
Caring for garden beds-low
maintenance.
$77,400
180,000 square feet of lawn
$30,000
24,000 square feet of low-maintenance beds
Caring for garden beds-high
$57,600
$4,200
$8,700
18,000 square feet of high-maintenance beds
15,000 miles
maintenance .
Travel to jobs..
Customer billing and service..
30 customers
Required:
Compute the activity rate for each of the activity cost pools.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faae4f46e-e0a1-4878-bda0-600a65823225%2Fc2d831db-a9c1-4aff-aecc-503d3622fbc4%2Fu2j0bre_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Activity-Based Costing
EXERCISE 7-3 Compute Activity Rates [LO3]
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 costs 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.
Caring for garden beds-low maintenance
Caring for garden beds-high maintenance
Travel to jobs .
Customer billing and service
Square feet of lawn
Square feet of low-maintenance beds
Square feet of high-maintenance beds
Miles
Number of customers
The company has already completed its first-stage allocations of costs. The company's annual
costs and activities are summarized as follows:
Estimated
Overhead
Activity Cost Pool
Cost
Expected Activity
Caring for lawn
Caring for garden beds-low
maintenance.
$77,400
180,000 square feet of lawn
$30,000
24,000 square feet of low-maintenance beds
Caring for garden beds-high
$57,600
$4,200
$8,700
18,000 square feet of high-maintenance beds
15,000 miles
maintenance .
Travel to jobs..
Customer billing and service..
30 customers
Required:
Compute the activity rate for each of the activity cost pools.
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