Friday 26 September 2014

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

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   Square feet of lawn
  Caring for garden beds—low maintenance   Square feet of low-maintenance beds
  Caring for garden beds—high maintenance   Square feet of high-maintenance beds
  Travel to jobs   Miles
  Customer billing and service   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:

  Activity Cost Pool Estimated
Overhead
Cost
Expected Activity                          
  Caring for lawn $ 78,600     190,000  square feet of lawn
  Caring for garden beds—low maintenance $ 31,200     24,000  square feet of low-maintenance beds
  Caring for garden beds—high maintenance $ 49,680     18,000  square feet of high-maintenance beds
  Travel to jobs $ 3,600     15,000  miles
  Customer billing and service $ 7,500     38  customers


Required:
Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

  Activity Cost Pool        Activity Rate                                                           
  Caring for lawn $  per square foot of lawn
  Caring for garden beds—low maintenance $  per square foot of low maintenance beds
  Caring for garden beds—high maintenance $  per square foot of high maintenance beds
  Travel to jobs $  per mile
  Customer billing and service $  per customer



Explanation:

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