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 Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Activity Measure Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds 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 Caring for lawn Caring for garden beds-low maintenance Cost $ 81,000 $ 33,600 Caring for garden beds-high maintenance Travel to jobs $ 65,040 $ 4,600 $ 9,500 Customer billing and service Required: Expected Activity 180,000 square feet of lawn 30,000 square feet of low maintenance beds 24,000 square feet of high maintenance beds 21,000 miles 24 customers 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 Customer billing and service per square feet of low maintenance beds per square feet of high maintenance beds per mile 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 Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Activity Measure Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds 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 Caring for lawn Caring for garden beds-low maintenance Cost $ 81,000 $ 33,600 Caring for garden beds-high maintenance Travel to jobs $ 65,040 $ 4,600 $ 9,500 Customer billing and service Required: Expected Activity 180,000 square feet of lawn 30,000 square feet of low maintenance beds 24,000 square feet of high maintenance beds 21,000 miles 24 customers 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 Customer billing and service per square feet of low maintenance beds per square feet of high maintenance beds per mile per customer
Chapter9: Responsibility Accounting And Decentralization
Section: Chapter Questions
Problem 7EB: Discuss how, as warehouse manager for Vinnies Vinyls, you view the different rate of allocated costs...
Related questions
Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Manji
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.
Caring for garden beds-low maintenance
Caring for garden beds-high maintenance
Travel to jobs
Customer billing and service
Activity Measure
Square feet of lawn
Square feet of low maintenance beds
Square feet of high maintenance beds
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:
Activity Cost Pool
Caring for lawn.
Caring for garden beds-low maintenance
Caring for garden beds-high maintenance
Travel to jobs
Customer billing and service
Required:
Estimated Overhead
Cost
Expected Activity
$ 81,000
180,000 square feet of lawn
$ 33,600
$ 65,040
$ 4,600
30,000 square feet of low maintenance beds
24,000 square feet of high maintenance beds
21,000 miles
$ 9,500
24 customers
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
Customer billing and service
per square feet of low maintenance beds
per square feet of high maintenance beds
per mile
per customer
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning