Chapter 7 Question 1

Green Thumb Gardening is a small gardening service that uses activitybased 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 owers and exotic plants). Accordingly. the company uses the ve activity cost pools listed below: Activity Cast Pool Activity Measure Caring for lawn Square feet of lawn Caring for garden bedslow maintenance Square feet of low; maintenance beds Caring for garden bedshigh maintenance Square feet of high maintenance beds Travel to jobs Miles Customer billing and service Number of customers The company already has completed its rst stage allocations of costs and has summarized its annual costs and activity as follows: Estimated Overhead Activity Coast: Pool Cost Expected Activity Caring for lawn $85,3[i' 136,0:'10 square feet of lawn Caring for garden bedslow maintenance 3 3E,4DEI 23,006 square feet of low maintenance beds Caring for garden bedshigh maintenance $45,73 1?, square feet of high maintenance beds Travel to jobs 5 3,400 14,000 miles Customer billing and service $ Lll 32 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 ft of lawn Caring for garden beds-low maintenance per square ft of low maintenance beds Caring for garden beds-high maintenance per square ft of high maintenance beds Travel to jobs per mile Customer billing and service per customer