# 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
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Compute the activity rate for each of the activity cost pools.

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Step 1

Calculate the activity rate for carrying for lawn:

Step 2

Calculate the activity rate for carrying for garden beds:

Step 3

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

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