Complete the first stage allocations of costs to activity cost pools as illustrated in Exhibit 7–6.Required:Green Thumb Gardening is a small gardening service that uses activity-based costing to estimatecosts for pricing and other purposes. The proprietor of the company believes that costs are drivenprimarily by the size of customer lawns, the size of customer garden beds, the distance to travel tocustomers, and the number of customers. In addition, the costs of maintaining garden beds dependsEXERCISE 7–3 Compute Activity Rates LO7-3high main-on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) ortenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activitycost pools listed below:Activity MeasureActivity Cost PoolSquare feet of lawnSquare feet of low maintenance bedsSquare feet of high maintenance bedsCaring for lawn ...Caring for garden beds-low maintenanceCaring for garden beds-high maintenanceTravel to jobs ......Customer billing and serviceMilesNumber of customersThe company already has completed its first stage allocations of costs and has summarized itsannual costs and activity as follows:EstimatedOverheadActivity Cost PoolCostExpected ActivityCaring for lawnCaring for garden beds-low$72,000150,000 square feet of lawnmaintenance$26,40020,000 square feet of low maintenance bedsCaring for garden beds-highmaintenance$41,400$3,250$8,75015,000 square feet of high maintenance beds12,500 milesTravel to jobs...Customer billing and service...25 customers

Question
Asked Feb 3, 2020
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Compute the activity rate for each of the activity cost pools. 

Complete the first stage allocations of costs to activity cost pools as illustrated in Exhibit 7–6.
Required:
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 garden beds, the distance to travel to
customers, and the number of customers. In addition, the costs of maintaining garden beds depends
EXERCISE 7–3 Compute Activity Rates LO7-3
high main-
on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or
tenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity
cost pools listed below:
Activity Measure
Activity Cost Pool
Square feet of lawn
Square feet of low maintenance beds
Square feet of high maintenance beds
Caring for lawn ...
Caring for garden beds-low maintenance
Caring for garden beds-high maintenance
Travel to jobs ......
Customer billing and service
Miles
Number of customers
The company already has completed its first stage allocations of costs and has summarized its
annual costs and activity as follows:
Estimated
Overhead
Activity Cost Pool
Cost
Expected Activity
Caring for lawn
Caring for garden beds-low
$72,000
150,000 square feet of lawn
maintenance
$26,400
20,000 square feet of low maintenance beds
Caring for garden beds-high
maintenance
$41,400
$3,250
$8,750
15,000 square feet of high maintenance beds
12,500 miles
Travel to jobs...
Customer billing and service...
25 customers
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Complete the first stage allocations of costs to activity cost pools as illustrated in Exhibit 7–6. Required: 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 garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends EXERCISE 7–3 Compute Activity Rates LO7-3 high main- on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or tenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below: Activity Measure Activity Cost Pool Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds Caring for lawn ... Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs ...... Customer billing and service Miles Number of customers The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows: Estimated Overhead Activity Cost Pool Cost Expected Activity Caring for lawn Caring for garden beds-low $72,000 150,000 square feet of lawn maintenance $26,400 20,000 square feet of low maintenance beds Caring for garden beds-high maintenance $41,400 $3,250 $8,750 15,000 square feet of high maintenance beds 12,500 miles Travel to jobs... Customer billing and service... 25 customers

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Expert Answer

Step 1

Calculate the activity rate for carrying for lawn:

Accounting homework question answer, step 1, image 1

Step 2

Calculate the activity rate for carrying for garden beds:

Accounting homework question answer, step 2, image 1

Step 3

Calculate the activity rate for carrying for garden beds for low maintenance:

Accounting homework question answer, step 3, image 1

...

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