Exercise 7-3 Compute Activity Rates [LO3]

Please explain how you arrived at your answers - this really helps me a lot! Thank you!

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 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 has already completed its first-stage allocations of costs. The companys annual costs and activities are summarized as follows:

Activity Cost Pool	Estimated Overhead Cost		Expected Activity
Caring for lawn	$	87,400	165,000	square feet of lawn
Caring for garden bedslow maintenance	$	40,000	27,000	square feet of low-maintenance beds
Caring for garden bedshigh maintenance	$	59,850	21,000	square feet of high-maintenance beds
Travel to jobs	$	5,000	18,000	miles
Customer billing and service	$	10,300	32	customers

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 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 has already completed its first-stage allocations of costs. The companys annual costs and activities are summarized as follows:

Activity Cost Pool Estimated Overhead Cost Expected Activity

Caring for lawn $ 87,400 165,000 square feet of lawn Caring for garden bedslow maintenance $ 40,000 27,000 square feet of low-maintenance beds Caring for garden bedshigh maintenance $ 59,850 21,000 square feet of high-maintenance beds Travel to jobs $ 5,000 18,000 miles Customer billing and service $ 10,300 32 customers