EXERCISE 7-3 Compute Activity Rates [LO3] 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 --------------------- 1.Caring for lawn 2.Caring for garden beds low maintenance 3.Caring for garden beds high maintenance 4.Travel to jobs 5.Customer billing and service Activity Measure ------------------------ 1.Square feet of lawn

2.Square feet of low- maintenance beds

3.Square feet of high- maintenance beds

4.Miles

5.Number of customers

The company has already completed its first-stage allocations of costs. The company's annual costs and activities are summarize as follow: Activity Costs pool Estimated Overhead Cost ----------------------- ----------------------------- 1.Caring for lawn $77,400 2.Caring for garden $30,000 beds low maintenance 3.Caring for garden $57,600 beds high maintenance 4.Travel to jobs $4,200 5.Customer billing and service $8,700

Expected Activity

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1. 180,000 Square feet of lawn

2.24,000 Square feet of low-maintenance beds

3.18,000 Square feet of high-maintenance beds

4.15,000 Miles

5.30 customers

Required: Compute the activity rate for each of the activity cost pools.