ABC in a service organization

Paul's Landscaping Services provides landscaping services to both residential and

business customers. The design division works with customers to design the service,

which is then installed by the installation division. Because the product is guaranteed,

the customer is required to subscribe to the maintenance services for the first year

of the installation. This ensures that the installation is properly maintained and that

any issues arise from product defects and not neglect.

The following exhibit summarizes the three landscaping services and their costs:

Design Installation Maintenance

Overhead Items

Depreciation $$45,000$ $$120,000$ $$60,000$

Utilities $10,00010,0001,000$

Supplies $24,000140,00060,000$

Wages $110,000126,000215,000$

$$189,000$ $$396,000$ $$336,000$

Staff Hours

Number of staff $238$

Weeks worked per year $303030$

Days worked per week $555$

Hours worked per day $788$

Time Per Package $($Hours$)$

Custom $21060$

Deluxe $51580$

Estate $1225110$

Paul's accountant has advised you that costing should be done using TDABC and the

cost driver should be hours worked in each department.

a$)$ What is the cost driver rate in each department? Round to two decimals.

Design $Answer $1$

$0$

Installation $Answer $2$

$0$

Maintenance $Answer $3$

$0$

b$)$ What is the total cost of each of the three packages? Round to nearest dollar.

Custom $Answer $4$

$0$

Deluxe $Answer $5$

$0$

Estate $Answer $6$

$0$