Question
Forrest Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs
Forrest Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity based costing system:
Overhead costs:
Wages and salaries70,000Other expenses.40,000Total110,000
Distribution of resource consumption:
Activity Cost PoolsMaking BouquetsDeliveryOtherTotalWages and salaries55%35%10%100%Other expenses45%25%30%100%
The 'Other' activity cost pool consists of the costs of idle capacity and organisation-sustaining costs.
The amount of activity for the year is as follows:
Activity Cost PoolActivityMaking bouquets20,000 bouquetsDelivery1,000 deliveries
What would be the total overhead cost per delivery according to the activity based costing system? In other words, what would be the overall activity rate for the deliveries activity cost pool? (Round your answer to the nearest whole pence).
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