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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 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 Measure Activity Cost Pool Caring for lawn Square feet of lawn. Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Square feet of low maintenance beds Square feet of high maintenance beds Miles Customer billing and service 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 Cost Expected Activity Activity Cost Pool Caring for lawn 170,000 square feet of lawn $ 81,000 $ 33,600 Caring for garden beds-low maintenance $ 64,560 Caring for garden beds-high maintenance Travel to jobs 30,000 square feet of low maintenance beds 24,000 square feet of high maintenance beds 21,000 miles 30 customers $ 4,000 $ 8,300 Customer billing and service Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Caring for lawn per square feet of lawn Caring for garden beds-low maintenance per square feet of low maintenance beds Caring for garden beds-high maintenance Travel to jobs per square feet of high maintenance beds per mile Customer billing and service per customer

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 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 Measure Activity Cost Pool Caring for lawn Square feet of lawn. Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Square feet of low maintenance beds Square feet of high maintenance beds Miles Customer billing and service 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 Cost Expected Activity Activity Cost Pool Caring for lawn 170,000 square feet of lawn $ 81,000 $ 33,600 Caring for garden beds-low maintenance $ 64,560 Caring for garden beds-high maintenance Travel to jobs 30,000 square feet of low maintenance beds 24,000 square feet of high maintenance beds 21,000 miles 30 customers $ 4,000 $ 8,300 Customer billing and service Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Caring for lawn per square feet of lawn Caring for garden beds-low maintenance per square feet of low maintenance beds Caring for garden beds-high maintenance Travel to jobs per square feet of high maintenance beds per mile Customer billing and service per customer

Cornerstones of Cost Management (Cornerstones Series)
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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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 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 Caring for lawn Activity Measure Square feet of lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Square feet of low maintenance beds Square feet of high maintenance beds Miles Travel to jobs Customer billing and service 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 Cost Activity Cost Pool Caring for lawn Expected Activity $ 81,000 $ 33,600 170,000 square feet of lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs $ 64,560 30,000 square feet of low maintenance beds 24,000 square feet of high maintenance beds 21,000 miles Customer billing and service $ 4,000 $ 8,300 30 customers Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Caring for lawn per square feet of lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs per square feet of low maintenance beds per square feet of high maintenance beds mile per Customer billing and service per customer
Transcribed Image Text: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 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 Caring for lawn Activity Measure Square feet of lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Square feet of low maintenance beds Square feet of high maintenance beds Miles Travel to jobs Customer billing and service 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 Cost Activity Cost Pool Caring for lawn Expected Activity $ 81,000 $ 33,600 170,000 square feet of lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs $ 64,560 30,000 square feet of low maintenance beds 24,000 square feet of high maintenance beds 21,000 miles Customer billing and service $ 4,000 $ 8,300 30 customers Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Caring for lawn per square feet of lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs per square feet of low maintenance beds per square feet of high maintenance beds mile per Customer billing and service per customer
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